Kohl’s Third-Time’s-No-Charm Fizzle

Third time’s no charm.

Three quarterly reports, three straight declines in quarterly sales for Kohl’s.

Beyond the vagaries and volatility in stock price, where Kohl’s shares sank in the wake of its earnings report last week, Kohl’s showed the lingering impact of the physical store model.  Fewer sales in-store, of course, mean less torque to the top line. Less torque to the top line means drag and declines on the bottom line.

Yes, management said that business has improved as measured through the last weeks of the quarter and even into the back-to-school season.  It may not be enough to keep a fourth quarterly decline at bay.

In terms of the headline numbers, in the latest quarter that ended in early August, sales were down 3.1 percent to $4.4 billion, and same-store sales were off 2.9 percent.  The impact to the bottom line was palpable, as net income slipped to $247 million from $292 million last year.

So much, it is true, hinges on foot traffic.  As has been well-known, the department store firm is looking to drive traffic through the Amazon returns program, through which the company will accept “eligible” Amazon items without labels or boxes.  CEO Michelle Gass has commented that  “the overarching goal of this program is to convert the traffic that comes into our stores into loyal Kohl’s shoppers over time.”

The rollout was finalized in July, and it dovetails with an initiative to boost traffic through the Curated by Kohl’s, showcasing (at 50 stores) a rotating set of brands through concurrent digital and in-store efforts.

The moves to spur foot traffic come as the U.S. consumer is still relatively strong, even the face of a lingering trade war.  At this writing, China just announced tariffs on $75 billion worth of U.S. goods and will put auto tariffs back in place.  The trade war back and forth continues, and one wonders what happens in the face of slipping stock markets.

Of course, there remains the chance that the current administration will impose new tariffs on Chinese exports, where they’d been delayed, as officials eyed the all-important holiday shopping season — and it should be noted August’s consumer sentiment reading came in below expectations.   These are all macro-concerns, of course, but they do have a lasting impact on the micro-economic side, where decisions are made, where firms navigate their immediate and longer-term environments.  Might macro swamp micro in this environment?  Time will tell, but the clock is ticking.


Supplier payments: In a move aimed at boosting card payments in the B2B arena — where only 12 percent of payments are done with a card — commercial bill pay company Plastiq has said U.S. Visa commercial cardholders will be able to use the Plastiq card to pay vendors, even if they don’t accept credit cards.

Target: Omnicommerce is the engine behind the latest earnings beat (by 20 cents on the EPS line).  Specifically: buy online, pickup in store and its Shipt same-day grocery delivery business are among its leading drivers of growth, adding 1.5 percentage points to its overall same-store sales growth.

Google: 15 years on, after its IPO at $85 a share, the company (now through Alphabet, of course), has moved well beyond search into media, into mobile wallets, into all manner of “other bets” – and the stock trades for $1,189 today.


Business Confidence: U.S. firms are cutting planned expenses — which has a ripple effect across investing in plants and equipment (and maybe, eventually, jobs) — over fears of an economic downturn.

Fresh Deliveries: Groceries are not catching on everywhere, it seems.  Deutsche Post DHL has stopped making Amazon Fresh deliveries in Germany due to low demand.  In that country, DHL has ended the partnership, and said that complexity helped shutter that effort, too.

Facebook: The social media firm has debuted tools that let users separate their web browsing history from their personal profiles.  But there are reports that the move makes advertising on the social media platform less valuable to marketers, and impacts Facebook sales.