Kohl’s plans to stay the course with its brick-and-mortar stores.
The Menomonee Falls, Wisconsin-based retailer doesn’t plan on opening or closing any locations. Rather, it aims to boost productivity across its sprawling fleet.
Kohl’s, touting itself as the largest U.S. department store chain, with 1,153 stores, on Tuesday said that well over 90% of its retail locations are profitable. But with overall sales dipping in the fiscal fourth-quarter, Kohl’s officials said they are taking steps to reestablish the chain as a leader in value and quality for its shoppers as it attempts a turnaround.
“Value continues to be a focus and is especially important given the macroeconomic uncertainty,” Kohl’s CEO Michael Bender said on the earnings call. “The majority of our customers are low to middle income. These consumers have been consistently under pressure and are being thoughtful with how they are spending their discretionary income. It is clear that when we offer value, it resonates with this customer.”
“We will be focused on making sure that we continue to push the stores’ productivity as far as we can going forward.”
The U.S. department store sector has been challenged for years, including Kohl’s. Department store operator Macy’s has been closing underperforming stores to focus on and invest in profitable locations. In contrast, off-price retail giants such as TJX Cos., parent of T.J. Maxx and Marshalls; Burlington Stores; and Ross Dress for Less have consistently seen revenue gains and are opening hundreds of stores this year.
In the quarter ended Jan. 31, Kohl’s saw a net sales decrease of 3.9% to $5 billion while comparable sales dropped 2.8%. Net income rose to $125 million compared with $48 million in the prior-year period. For the full year 2026, the retailer is projecting that net sales and comparable sales will be down 2% to flat.
But there will be no major changes to the chain’s brick-and-mortar footprint, according to Bender.
“As we look at that store base on an annual basis, we will continue — from a hygiene perspective — to make sure that we believe that those stores are positioned in the right spot and delivering what we need,” he told Wall Street analysts. “So I would not anticipate any sort of grand plan of saying we are taking stores out or adding stores at this point.”
Kohl’s focus “is actually on optimizing what we already have, and we will be focused on making sure that we continue to push the stores’ productivity as far as we can going forward,” Bender said.
“And to the extent that there are opportunities for us to relocate ... those are opportunities for us,” he said. “We can do that. But no major change in the store base expectation at this point.”
Kohl’s closed 27 stores last year.
Seeking impulse buys
When it reported earnings, the retailer outlined its plans to drive sales and foot traffic, basically by offering lower prices and expanding and better spotlighting its private-label lines. Kohl’s had already rolled out an “Impulse” section at its checkout line with low-cost items.
“We have identified more ways to inspire our customers and drive highly incremental, impulsive shopping behaviors,” Bender said. “To capitalize on this, we are implementing the Deal Bar and an Impulse toy tower, both of which are specifically designed to offer compelling value on items like seasonal home decor and trending toys with all products priced under $10.”
Those initiatives will be installed “this spring to maximize key seasonal moments including Valentine’s Day, Easter and Mother’s Day,” according to Bender.
Kohl’s missed an opportunity during the holidays, he said.
“During the fourth quarter, we lost some competitive ground during high-traffic shopping windows, including Black Friday, Cyber Monday and the week following Christmas,” Bender said. “Consistent and differentiated value statements across marketing, in-store and online will be a catalyst to improve our performance."
In its investor presentation Tuesday, Kohl’s said it will launch a “By Kohl’s” promotional campaign to highlight its private brands; differentiate its kids’ business with an expanded assortment of under-$10 price points; and expand brands like Jumping Beans.
Changing the store floor
The chain also aims to improve its in-store experience. For example, it will be improving signage to guide people to its proprietary LC Lauren Conrad and Tek Gear apparel lines. It will also highlight key styles with mannequins to help customers find the product and fit they desire.
Kohl’s has shop-in-shop Sephora beauty boutiques in its stores that attract younger shoppers. The chain has now moved its junior-clothing section closer to Sephora, according to Bender, to spur those makeup buyers to browse and purchase apparel.
“The concerning thing is that as Kohl’s continues to wallow in its general disarray, other retailers — like Target — are sharpening their acts.”
Kohl’s still has its work cut out for it, according to Neil Saunders, a retail analyst and managing director at analytics firm GlobalData.
“While there are some attempts to make stores more engaging — like better use of mannequins to showcase different private-label brands — these get lost in a sea of clutter that makes stores hard to shop,” Saunders said in a note on Tuesday. “The value equation is also broken with many prices far too high for the quality of the product and the experience being offered. This is why so many customers are defecting and will continue to defect until Kohl’s remedies the issues.”
And the landscape is getting even more competitive for Kohl’s, according to Saunders.
“The solution to making Kohl’s a better business is to grow the sales line,” he said. “But this necessitates a complete rethink of the proposition. While management has some ideas and thoughts about how to do this, we do not believe the plans are cohesive or disciplined enough to create meaningful change on the ground. The concerning thing is that as Kohl’s continues to wallow in its general disarray, other retailers — like Target — are sharpening their acts. This will simply load more pressure on Kohl’s and means it slips further and further behind.”
Kohl’s didn’t respond to an email from CoStar News seeking comment on Saunders’ remarks.