Kohl's on Tuesday said that fourth quarter net revenue fell 10.1% year over year to $6.1 billion. For the full year, net revenue tumbled 20.1% to $16 billion, according to a company press release. Gross margin in the quarter contracted 73 basis points to 32%, and for the year contracted 464 basis points to 31.1%.
Thanks partly to a tax benefit, net income rose 29% year over year to $343 million. For 2020, the company ended in the red, however, with a net loss of $163 million, a 124% drop. Operating income in the quarter fell to $316 million, from $401 million the year before. The retailer swung to a $262 million loss for 2020, from $1 billion operating income in 2019.
On a conference call with analysts, CEO Michelle Gass said that in 2020 at least 2 million new visitors came to Kohl's stores to return an Amazon purchase — a service it's offered in all stores for nearly two years — and that a third were millennials.
Kohl's is among the many retailers that in 2021 can at least look forward to beating the results it had to endure last year, as the pandemic raged, apparel sales tanked and public health officials forced nonessential stores to shut down for weeks.
At Kohl's, sales remain down, but they're improving. For the current year, the company said it expects net sales to rise in the mid-teens percentage range compared to last year, and operating margin to land between 4.5% to 5%.
The retailer "is clearly on a trajectory to recovery" and is out-performing most of its department store peers, thanks in part to its off-mall locations, some improvements to its merchandise and, probably if only marginally, its Amazon returns policy, according to GlobalData Managing Director Neil Saunders. Kohl's strength in home and holiday decor helped during key seasonal selling days in the quarter, but "did not offset the softness in traffic to physical stores or the more muted demand for apparel, both of which ultimately pushed down sales," he said in emailed comments.
Still, it's still not entirely clear just how much Kohl's tie-up with Amazon is boosting actual sales, and Gass didn't clear up that mystery, saying only that the Amazon partnership is "accretive to both sales and profits." GlobalData research shows that only a small portion of that traffic drives incremental sales.
"[I]t is more of a help than a [hindrance] and is something that gives people a reason to go to Kohl's – which is a lot more than can be said for department store rivals," Saunders said.