Kohl’s to elevate the store experience

Menomonee Falls, Wis. – As the rollout of Sephora shops draws news customers to Kohl’s, the retailer is remapping its front of store layout.

The 200 stores that have added Sephora so far continue to see increased levels of traffic and a mid-single-digit sales lift vs. the rest of chain. In addition, 25% of Sephora department shoppers are new to Kohl’s. They are also younger and more diverse, according to Kohl’s CEO Michelle Gass.

Those shoppers dovetail with the retailer’s emphasis on activewear, which saw a sales increase of more than 40% last year.

As part of store reset, activewear will move to the front of the store along with Sephora. Kohl’s will also inject more discovery into stores with more frequent use of capsule collections such as the new Draper James RSVP women’s line. Stores will also introduce dozens of emerging products and brands on a rotating basis to drive excitement.

By the end of 2022, more than half of Kohl’s store base will have Sephora and the evaluated experience layouts in place.

Kohl’s executives plan to share more details about the company’s strategy during its Investor Day on March 7.

During the recent Q4, the company generated sales and profit gains despite supply chain problems that drove available-for-sale inventory down nearly 40% in November and December. Women’s, private label soft home and men’s were called out as the most impacted categories.

“Our in-store position was even worse,” EVP/CFO Jill Timm said during the company’s quarterly review of results yesterday.

Kohl’s feels better about inventory flow going forward, having adjusted its buying cycle last summer to book orders earlier and build in more transit time for deliveries.

“We remain extremely confident in the future growth and cash flow generation of our business, and in 2022 will build on our momentum as we further scale key initiatives such as Sephora,” said Gass.

For the fourth quarter ended Jan. 29, revenue rose 5.8% to $6.5  billion, with double-digit growth in store sales. Net income declined 13.0% to $299 million.

For the full fiscal year, total revenue increased 21.8% to $19.4 billion. Kohl’s generated net income of $938 million vs. a net loss of $163 million in the prior fiscal year.