Kohl’s Increases Private Brands Inventory to Bolster Value Messaging

Kohl’s will sharpen its focus on value by increasing its inventory of private brands and delivering more targeted offers as it works to reverse its declining sales.

The retailer said this Tuesday (Nov. 26) while reporting that during the third quarter, it saw its net sales decrease 8% year over year, while its comparable sales were down 9.3%, according to a Tuesday earnings release.

“We are not satisfied with our performance and are taking aggressive action to reverse the sales declines,” Kohl’s CEO Tom Kingsbury said Tuesday during the company’s quarterly earnings call. “We must execute at a higher level and ensure we are putting the customer first in everything we do.”

In a presentation released Tuesday, Kohl’s said that its sales decline was caused in part by soft sales in its core businesses of apparel and footwear.

During the call, Kingsbury attributed this in part to the retailer lowering its inventory of private apparel brands as it added new market brands.

“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.

Kingsbury also pointed to Kohl’s exit from the fine jewelry business as it devoted more space to beauty products. Fine jewelry was “a category that had been highly valued by our customers,” he said.

The retailer saw growth in some categories during the third quarter, according to the presentation. Its Sephora at Kohl’s sales increased 15%, with comparable sales growth of 9%, as this offering continued to gain share in the beauty market.

Kohl’s also saw its impulse sales grow 40% year over year as it added queuing lines to 200 more stores, the presentation said.

The retailer also expects to see sales growth from the Babies “R” Us shops it introduced in 200 of its stores during the third quarter, per the presentation.

Aiming to reduce its sales slide in other categories, Kohl’s plans to increase its inventory in private apparel brands, continue reintroducing fine jewelry in its stores, deliver more targeted offers and direct mail to its most engaged customers, and use social and digital marketing to reach new customers, according to the presentation.

“The merchants really went out there and bought some really, really great product at great values,” Kingsbury said during the call. “So, really showcasing that, we do that every year, but we really have a heightened approach this year based on what happened in the third quarter.”

The earnings call came a day after Kohl’s reported that Kingsbury will step down from the CEO role on Jan. 15 and be succeeded by Michaels Companies CEO Ashley Buchanan.

Kingsbury will retain an executive advisory role and board seat through his retirement in May.

“Ashley has driven change by having a clear vision, empowering teams and practicing organizational accountability for results,” Kohl’s Board Chair Michael Bender said during Tuesday’s earnings call. “We know he will be a great leader and bring a new perspective in our next chapter.”

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