In a call with analysts, Kohl's CEO Michelle Gass said the retailer's returns partnership with Amazon continues to deliver "sequential improvement in traffic," according to a transcript from Motley Fool. But, in light of the fourth quarter's flat comps, those traffic spikes haven't meaningfully translated to sales growth, according to a note from Wells Fargo analysts.
Managing costs, and using those savings toward strategic investments, will remain an "intense focus" this year and beyond, Gass said.
As it looks to drive sales, Kohl's is rolling out across the chain a new juniors private label, Vylette, that showed promise after testing last year in 125 stores, Gass said. More private label efforts are in the works, part of a revamp of women's apparel, which remains a weak spot, she added.
Kohl's appears to be taking a page from Target's playbook. The mass merchant in recent years swept away many of its private labels and brand partnerships, introducing new ones that have been key to its recent success.
In addition to the new private label for teens, Kohl's is expanding last year's tie-ups with emerging brands LovePop, Kid Made Modern and Luca + Danni. Those were successful enough to warrant expansion to most stores this year, Gass said.
It's not clear whether the discount department store's emphasis on expense management might interfere with any overhaul of its women's apparel business. And several analysts on Tuesday expressed concern about how much the retailer's agreement to take Amazon returns in all stores is really helping it.
More details on the company's tactics to move the needle in women's apparel will be released at its investors day later in the month, Gass said. Kohl's broader, longer-term fortunes "center on sustainable improvement in Women's, and Digital and concrete signs showing return on the Kohl's Amazon returns partnership," Wedbush analysts led by Jen Redding said in a client note emailed to Retail Dive.
Gass spoke to analysts regarding the company's fourth quarter, when revenue rose 0.1% to $6.8 billion, beating most estimates. Reported net income fell 3% to $265 million, according to a company press release.
Gross margin in the quarter contracted to 32.7% from 33.5%, the company also said. Wedbush analysts noted that promotions have been running higher year over year, with "a sharp spike in inventories."