Kohl’s to try everyday value prices

On the heels of a “kitchen sink” quarter that saw the struggling department store chain close the year with a fourth quarter of money loss, Kohl’s new CEO is betting on the retailer’s comeback in the ability of a new management team to improve the customer experience while continuing to expand its successful Sephora joint venture.

Speaking to investors on Wednesday, Chief Executive Officer Tom Kingsbury, who was appointed to the role on a permanent basis on February 2 after replacing former leader Michelle Gass who left Levi’s after four tumultuous years, said improving customer experience was the first of the four priorities.

“Our partnership with Sephora is a great example of how we’re improving the customer experience,” Kingsbury told analysts and investors on the company’s earnings call, noting that nearly 8 million customers bought beauty products at Sephora at Kohl’s last year.

“In the fourth quarter, our total beauty sales increased 90% and we achieved comparable beauty sales growth in the high single-digit percentages across the 200 Sephora stores opening in 2021 and sales better than 400 stores were expected to open by 2022.” he added, noting that this trend should continue to grow in the coming years as Kohl’s further expands its in-store presence.

Kohl vs?

In a market where Kohl’s is squeezed from below for scale by Walmart, online by Amazon and overtaken by Target, the Wisconsin-based chain that offers 1,170 brick-and-mortar locations that are within 10 miles of 80 percent of the U.S. population is clearly in a tight spot when it comes to identity.

While he expressed confidence that he has the right plans, organizational structure and team in place to drive improved and more consistent sales and earnings performance, Kingsbury also said he wanted to be realistic about setting expectations .

“The full impact of our efforts will take time, it will not happen overnight, and we must recognize that we are implementing these actions in a challenging macroeconomic context,” he said.

Still, after visiting stores, staff sellers and partners around the country, Kingsbury also said it was “clear to me that Kohl’s fills a significant need in the market,” offering what he called “very relevant products with great value to millions of people.” customers at well-located stores across the United States and online.”

Bring on the K-Team

Much of those changes, including the opening of another 250 full-size and 50 smaller Sephora stores this year, will be overseen by the new executive team Kingsbury has assembled.

Just yesterday, it was announced that 30-year retail veteran Dave Alves would join the company in April as its new president and chief operating officer, as well as the prior appointment two weeks earlier of 25-year retail veteran Nick Jones to become Kohl’s. new director of merchandising and digital.

Another change task the new team will take on has to do with pricing and promotion, the latter of which, particularly coupons and QR codes, has long been an important part of the loyalty strategy of Kohl’s, but now they’re overhauling themselves and reducing their reliance on the retailer. general promotions, which cost him dearly in the fourth quarter.

“We will test the daily value price with a small percentage of our product assortment, and if it is successful, we will build it accordingly in the following years,” Kingsbury said. “We fully recognize the sensitivities around pricing with our customers and will address this great measure and flexibility,” he said (emphasis his).

Still, stores are and will continue to be incredibly important to Kohl’s, he said, accounting for 70 percent of sales, but Kingsbury said the retailer needed to do a better job of increasing store productivity.

“In short, improving the customer experience, accelerating and simplifying our value strategies, managing inventory and expenses with discipline, and strengthening the balance sheet are our four overarching priorities for 2023 and the broader Kohl’s organization she’s aligned and focused on executing against each of them,” Kingsbury said.