Menomonee Falls, Wis. – Kohl’s is looking to ancillary areas for growth in home as the segment comes back down to earth following last year’s pandemic-fueled boom.
Sales in home tumbled 17% in the first quarter ended April 30 compared to a 30% increase in last year’s Q1. The company expects category demand to remain weak, CEO Michelle Gass told investors during this morning’s quarterly review call.
“We are adjusting to the new normal and continuing to pursue incremental areas such as outdoor furniture, expanded décor, kids bedroom furnishings and the pet category,” she said. “We will also leverage our pricing elasticity model, ensuring we stay competitive in value while taking price where it’s appropriate.”
Kohl’s is planning a significant expansion in home décor this fall and is focused on building out categories where it has relatively low share.
It’s also looking to the Kohl’s/Sephora partnershipto drive the top line as well as comps. Sephora shops are now in 200 stores – which have also refreshed their layouts – and the Sephora set will expand to 600 stores by late summer. Stores that have already added the beauty section are drawing new customers who are younger and more diverse, with 25% of Sephora shoppers visiting Kohl’s for the first time.
“They’re shopping about [two times]We offer more than the average customer. And we’re getting a lift to the basket. Over half have at least one other item in the basket,” said Gass. “This is a sea change for the company.”
Although the first quarter got off to a strong start with positive low-single digits comps through late March, sales weakened considerably in April as the business lapped last year’s stimulus and an inflationary consumer environment. The total company comp fell 5.2%.
As sales continue to grow sequentially through the remainder of the year, executives expect to return to positive comps. However, the company has reduced its full-year guidance. Net sales are expected to remain flat at 1%, as opposed to the prior guidance of 2% to 3.3%.
In the meantime, Kohl’s potential acquisitionThe company is moving forward. Gass said that the company has set out the procedures for submitting actionable bids. They expect to receive them in coming weeks.
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