Kohl’s Corp. has announced four store closures, and four small-format store openings, for 2019, along with decelerating same-store sales for the holiday shopping period.
The four store closures will be in Rego Park; NY, Valley Stream, NY; Lenexa, KS; and Houma, LA.
Kohl’s will also consolidate three customer service and operations center locations into two, closing its Dallas center in early March and expanding locations in San Antonio, TX and Milwaukee.
Locations and timing for the four new stores will be announced in the future. The company will offer voluntary retirement programs to hourly associates ages 55 and over with at least 15 years of service.
Kohl’s says it can’t quantify non-recurring charges from these changes for the fourth quarter and beyond, but expects to tally the totals by the March earnings release.
Read:J.C. Penney to close three stores, foreshadows further closures
Kohl’s also announced holiday period same-store sales growth of 1.2%, which fell short of the high expectations set by the fourth quarter last year. Still it was enough to overshadow all of the positives that Cowen thinks should be highlighted.
“We note that Kohl’s holiday comps will likely be the best in the department store sector, which is experiencing heightened store traffic pressure,” wrote Cowen analysts led by Oliver Chen.
Instead, Cowen focused on the positives, such as products from Under Armour Inc.
, Nike Inc.
and Adidas AG
; store fulfillment of online purchases; private labels that “are helping drive the right product at the right place and time”; and a “leading” loyalty program.
See:Retailer stocks take a broad beating, led by Macy’s record plunge
“We believe Kohl’s is ahead of peers in leveraging data to drive improved results through a combination of best-in-class loyalty program, greater personalization, and marketing effectiveness which are yielding stronger customer engagement and new customers,” Cowen wrote.
“Meanwhile, we think Kohl’s has a healthy footprint and are encouraged by the success of the standard-to-small initiative which drives greater productivity.”
Cowen rates Kohl’s
shares outperform, calling it its “favorite department store pick,” with an $82 price target.
Kohl’s shares sank 6.7% in Thursday trading, which analysts call “overdone,” particularly after Macy’s Inc.
announced that it was slashing guidance after a lackluster holiday season.
Read:Macy’s has only itself to blame for lackluster holiday performance, analyst says
Moody’s Christina Boni, department store analyst, says the retailer’s results were “tempered” by the 6.9% increase in November and December sales last year, which raised the bar for this year.
Still, Kohl’s lowered its debt by about $413 million in the fourth quarter.
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“In our view, Kohl’s executed well over the holidays,” wrote Neil Saunders, managing director at GlobalData Retail. “For us, the main takeaway from Kohl’s numbers is not that growth has come down a bit. This is to be expected. Rather it is that Kohl’s is executing and delivering in a consistent way with some good progress on both the top and bottom lines.”
Kohl’s shares have rallied 10% over the past year while the SPDR S&P Retail ETF
is down 7.2% and the S&P 500 index
has sunk 6.2% for the period.
View more information: https://www.marketwatch.com/story/kohls-same-store-sales-deceleration-overshadows-a-positive-story-2019-01-10