Kohl’s has released an update on the “next phase of its long-term business strategy,” based on an internal town hall-style meeting, but is providing few new details.
The retailer last week said it shared this strategic direction with associates: “Kohl’s expands what’s possible for families with quality brands and styles priced for real life, so they can make the most of moments big and small.” A spokesperson acknowledged the dearth of specifics but said the company would share more in the future.
The company appears to be asking for patience. Throughout, Kohl’s emphasized that its turnaround is a multiyear process that entails “taking a long-term approach to rebuilding the company’s trajectory to growth.”
“The multiyear approach is designed to strengthen the company’s foundation, provide clarity on a differentiated position for Kohl’s in the retail landscape, and return the company to growth,” Kohl’s said.
But this memo contains little clarity into how the company will correct what are longstanding issues in merchandising, pricing, store experience and more, according to GlobalData Managing Director Neil Saunders, who called Kohl’s release “something of a nothing burger.”
Kohl’s listed “three key differentiators” — saying it aims to offer “the best curated assortment for the whole family;” “excel at inspiring meaningful moments – big and small;” and “provide undeniable value.”
There’s little to argue with there, Saunders said.
“There is nothing inherently wrong with Kohl’s broad aims, indeed, many like curation and emphasizing value make complete sense,” he said by email. “The problem is that there is a huge disconnect between what the plan says and what customers see on the ground.”
Merchandise is overabundant and often overpriced, especially for its level of quality, for example, according to Saunders.
“These are not new issues. They are things that have plagued the company for years,” he said by email. “What investors need to know is exactly how Kohl’s will remedy these things, not just the general aspiration. There also need to be more proof points such as concept stores where new methods of working have been applied and so forth.”
Kohl’s has made a few changes to its store layout in recent years, including moving juniors apparel closer to its Sephora beauty concessions and bringing petites back into stores. By September “impulse queuing lines” were in nearly all stores, CEO Michael Bender told analysts during a November conference call.
Most recently the department store introduced a “deal bar” at the front of all stores, with seasonal items and essentials priced under $10.
Bender indicated that stores are unlikely to close, though, saying in November that “the vast majority of our stores, well over 90% are profitable and productive for us.” About a year ago the company announced the closure of about 30 locations.
