Kohl’s is forecasting a difficult 2025 as its new CEO embarks on a lengthy turnaround project.
The department store chain released quarterly earnings Tuesday (March 11) that projected a 5% to 7% drop in revenue for the year, with comparable sales down 6.5% for the quarter.
Speaking to analysts during an earnings call, CEO Ashley Buchanan said Kohl’s has erred in recent years by shifting away from core offerings like jewelry and its proprietary brands while promoting new categories.
“A lot of the issues were probably self-inflicted over many years of decisions,” said Buchanan, who became chief executive in January. “We have a very loyal customer. When I toured stores, all I heard was how much they love Kohl’s. And what I realized is we’re kind of making it hard for them to love us.”
It was a problem former CEO Tom Kingsbury pointed to last year when Kohl’s revenue fell nearly 10% during the quarter.
“Given the importance of opening price points in the current environment, not having the appropriate level of private brands hurt our ability to serve our customers,” he said.
Buchanan on Tuesday argued that the retailer has also excluded too many brands from its coupons, a practice that hit its apex last year.
“This has created confusion and frustration with our loyal customers,” Buchanan said, adding that the trend is now being rolled back.
And customers are seeking value, he told analysts, noting the same thing many other executives are pointing out these days: consumers are feeling pinched.
“We don’t see it, too much geographically, per se. But when you look at income level, if you’re making less than 50, that consumer is pretty constrained from a discretionary standpoint,” he said. “If you’re making less than a hundred, it’s also pretty challenging.”
PYMNTS CEO Karen Webster explored these challenges in a column Tuesday, writing that people across all income groups are living paycheck to paycheck, even if they are able to cover their monthly bills without a struggle.
“This implies that living paycheck-to-paycheck isn’t solely about financial hardship or an inability to meet basic needs, but how people choose to manage their monthly income,” she wrote.
Meanwhile, Buchanan said he was optimistic that Kohl’s would recover, but stressed that restoring the company to growth will take some time.
“I want to be realistic on how we are setting our expectations. My full review of the business and go-forward strategy is still ongoing,” the CEO said.
