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Kohl’s On Road To Recovery As New Sephora Partnership Begins

Share Prices Up 7 Percent Following Second Quarter Earnings Announcement

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Kohl's store
Charles Krupa/AP Photo

Sales at Wisconsin-based department store chain Kohl’s Corp. are on par with where they were before the COVID-19 pandemic. That’s according to new second quarter data from the company released Wednesday.

The second quarter earning presentation from the Menomonee Falls-based company indicates net sales of $4.22 billion dollars between May and July. That’s down from the $4.31 billion in sales in the second quarter of 2018, but up around $1 billion from this time last year.

“Our business is building momentum,” said CEO Michelle Gass in a quarterly earnings call Wednesday morning. “We are confident that through our strategic efforts, we will drive sustainable future growth for years to come.”

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The company made a net income of $382 million in the quarter. Gass said the company is on track to reach goals this year that it was aiming to reach by 2023.

Share prices for the retailer jumped around 7 percent to $55.63 by the end of trading for the day Wednesday.

The company recently opened Sephora beauty shops inside some of its stores.

“Launching this complex of an initiative, standing up 200 stores, launching a completely new online experience, it’s about as flawless as we could get,” said Gass. “Customers are coming in, they’re engaging.”

The Sephora shops are set to reach 850 stores or more by 2023.

J.C. Penney featured Sephora in its stores for many years, but that partnership is set to end next year. The rival department store chain filed for bankruptcy last year, one of many stores to be affected by the pandemic.

Kohl’s Chief Financial Officer Jill Timm said the company is keeping an eye on uncertainty in the months ahead, with the hope of being “agile and responsive” and “minimizing the disruption.”

“There’s a heightened level of uncertainty as we look to the back half of the year with the delta variant, you know, what is that going to do for consumer confidence?” said Timm. “You have a lot of supply chain disruption, wage costs, inflation and labor and freight as well.”

Kohl’s, along with many other businesses, is feeling the effects of a tight employment market, said Timm. The company announced bonuses of up to $400 last month for employees at stores, distribution centers and e-commerce centers who remain with the chain through the holiday season.

The chain has also joined many other retailers in requiring employees to mask up again as the delta variant drives increases in cases across the country. Masks are still optional for customers except for areas with mandates in place.

The pandemic added to Kohl’s woes. Even before COVID-19, the company took criticism from some investors for what they said was a failure to keep Kohl’s competitive in the age of online shopping. A group of those investors attempted a failed takeover of the retailer’s board of directors earlier this year.

Gass said the company remains optimistic.

“We have very, very strong confidence,” said Gass. “We’re rethinking the entire store, we’re making investments to refresh the store.”

Kohl’s will announce its earnings for the ongoing third quarter in November.

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