Kohl’s Leans Into Digital During Pandemic Store Closures

As it leaned into its digital businesses with its stores closed amid the pandemic, Kohl’s Corporation saw its digital sales rise 24 percent for the quarter and accelerate to 60 percent in April. CEO Michelle Gass said in a Tuesday (May 19) first-quarter earnings call with analysts that the retailer amplified its digital marketing efforts and revised its online site content.

Gass said Kohl’s harnessed its “large and growing” email file of customers to “reach them in new and personalized ways.” The executive reported that over 40 percent of digital orders were fulfilled through ship from store and customer pickup in the first quarter. Gass also noted that the company reported positive digital sales growth in all of its categories.

The retail executive said home was the most formidable category, with digital sales rocketing over 50 percent for the quarter. She noted the company saw especially strong demand for gaming and electronics, among other areas. Kohl’s also saw continued digital strength in areas such as toys, active and beauty as well as growth in areas such as sleepwear, intimates and basics.

Gass said Kohl’s been working on a plan to follow the newest health and safety measures as its stores reopen. “These include operating with limited store hours, social distancing signage, elevated cleaning procedures, a new returns process, among many others,” Gass said. The retailer, for its part, has reopened approximately half of its stores throughout the nation

Gass noted that the retailer will start its Amazon returns process again as stores reopen and it foresees traffic building as shoppers bring back items bought during past several months.

As it worked to address the pandemic, Kohl’s said it cut its planned capital expenditures by about $500 million and sizably decreased expenses throughout the business. The company issued $600 million in notes due 2025, replaced as well as upsized its revolver to a $1.5 billion secured facility and managed its inventory receipts “meaningfully lower.” It also suspended its regular quarterly cash dividend starting in Q2 of 2020 and halted its share repurchase program.

All in, Kohl’s Corporation reported revenues of $2.4 billion and adjusted diluted loss per share of $3.20 compared to analyst estimates of $2.2 billion and $1.75. The firm had reported a first-quarter net sales drop of 43.5 percent. Investors were not pleased with the news, with shares of the retailer falling approximately 8.45 percent as of just before 1 p.m Eastern Time.