Amid a double-digit increase in digital sales and a focus on omnichannel efforts, Kohl’s Corporation beat analysts’ top-line revenue and earnings estimates for the fourth-quarter of 2018. The department store retailer reported revenues of $6.8 billion and earnings per share of $2.24 compared to analysts’ estimates of $6.6 billion and $2.18 per share.
Kohl's Corporation CEO Michelle Gass said in a fourth-quarter earnings conference call with analysts that investments in technologies such as its mobile app, and buy online, pick up in store (BOPUS), among other initiatives, are “resonating” with the company’s shoppers while bolstering traffic and sales. Moreover, “mobile again represented the majority of our traffic growth at over 70 percent of digital traffic and more than half of digital sales,” Gass said in the call. The executive also noted that “100 percent of our site visits are now touched by personalization in some way” through methods such as product recommendations, machine learning and personalized search.
Gass said that a pivotal prong to the retailer’s strategy for omnichannel commerce is growing the role and relevancy of its brick-and-mortar locations. “Our stores are a key asset and differentiator for Kohl's, we continue to innovate to make them more relevant and compelling for our customers,” Gass said in the call. The executive noted that the company’s locations can fill up to 40 percent of its digital orders. “This is especially critical during peak season,” Gass said.
In addition, Gass noted the company brought a new mobile checkout feature to 150 stores. And, according to a statement from Kohl’s, the retailer ended its fiscal year with 1,159 brick-and-mortar locations in 49 states. And, during the year, the company relocated two stores while opening one new store.
Rewards and Millennials
The company also is still experimenting with its Reward next-gen loyalty program. Gass said customers like the program's simplicity and the offering for rewards focuses on Kohl’s cash. “However, we also learned that we do not need to be as generous with customer rewards,” Gass said. As a result, the company plans to make changes “to optimize the rewards offerings to create the greatest impact.” The retailer plans to take these lessons to its next testing stage as it eyes bringing the offering into more locations during the summer, with a “full chain rollout” next year.
And, to help reach millennials, the company has rolled out a “millennial initiative” to bring consumers in this demographic to its stores. With that aim in mind, the company plans to experiment with an “outfit bar concept” in 50 brick-and-mortar locations in Philadelphia and Chicago. The bars are said to feature “millennial loved brands” like LC Lauren and POPSUGAR, with which the company unveiled an apparel collection last year. At the time, Kohl’s Senior Executive Vice President and Chief Marketing Officer Greg Revelle said, “Partnering with POPSUGAR allows us to connect with millennials in a credible, authentic and meaningful way.”
Today’s Kohl’s shopper is between the ages of 35 and 44 on average, according to past reports. That demographic is said to be younger than that of Walmart but older than the core customers of Target per Kantar Retail’s ShopperScape. Gass hopes, however, to help push the Kohl’s base lower, as she is looking to bring millennial customers to the brand as their new go-to location for merchandise of all kinds. “This is the quintessential Kohl’s shopper we want to see in the future,” Gass told Fortune last November.