Home products, beauty suppliers, toys and Amazon returns stood as bright spots for Kohl’s in the third quarter of 2020, even as the retailer posted a 13% year-over-year revenue decline in quarterly net sales, to about $3.78 billion.
Same-store sales decreased 13% for the retailer in Q3, and Kohl’s reported a net loss of about $12 million.
The results came as the retail chain prepared to focus more on activewear and personal care in 2021, as well as increasing its omnichannel capabilities, according to CEO Michelle Glass — moves influenced by the pandemic and changing shopping habits.
“We plan to expand active from 20% to at least 30% of our business,” Glass said during the post-earning call with investors. “As we think about active, we think of it in the broader sense, covering multiple categories, including active apparel and footwear, accessories, athleisure and outdoor. Our insight shows that more people are focusing on health and wellness, whether it’s working out or spending time outdoors. In addition, their active and athleisure wardrobe is expanding into many new occasions, and we expect this trend to continue.”
As Kohl’s seeks holiday season sales, the retailer is also planning to lean more on certain brands for revenue in Q4 and beyond, according to Glass.
“Given the early success we are seeing with Lands’ End, we will continue to offer their full catalog online, and we will be doubling the number of stores offering Lands’ End in 2021,” she noted. “We also saw some of our casual brands, like SO and Nine West, deliver strong growth during the quarter. Looking ahead, we feel good about our ability to show continued progress. In 2021, we will further iterate and evolve the portfolio to drive even more relevancy. This will include moving away from the Apartment 9 brand in women’s [wear] as we shift our focus to Nine West, and exiting the Chaps brand altogether.”
Smaller shops-within-shops also promise to play a part in Kohl’s evolving business in the coming quarters. “We are seeing meaningful outperformance in our elevated beauty shops that we’ve just recently expanded to 62 stores,” Glass said. “We are pleased with the response we are seeing with the newness we’ve introduced to customers as well, including our recent launch of Lauren Conrad Beauty.”
Kohl’s is also rolling out what it calls Wellness Markets in 50 stores and online, another initiative that could play a meaningful role for the Menomonee Falls, Wisconsin-based retailer in 2021 and drive more sales of various products.
“It includes everyday products across home, beauty, personal wellness, baby and pet care, with an emphasis on sustainable attributes,” Glass said. “This umbrella of wellness affords us the opportunity to experiment with many different products, and we are already getting good initial insight into areas like baby, pet and household supplies.”
The pandemic, of course, has sparked more online shopping, and for the third quarter of 2020, e-commerce represented 32% of the retailer’s total sales, increasing by 25% year over year.
“Our stores supported much of this growth, fulfilling nearly 40% of the digital sales. Kohl’s is positioned to continue benefiting from this shift,” Glass said. “We were pleased to see a number of our store-only customers become omnichannel customers during this time, and we expect this to continue as they enjoy the convenience of shopping digitally in addition to our stores.”
As Kohl’s continues to promote its omnichannel offerings, the retailer’s association with Amazon remains part of that push, according to Glass. “We are focused on driving further adoption on our pickup offerings and especially Store Drive Up. And we continue to be pleased with Amazon Returns, both from a customer experience and economic standpoint,” she noted, without giving more details.