Kohl’s Officially On The Brink Of Going Out Of Business?
Kohl's reported a less-than-stellar fourth-quarter sales performance, which follows previous losses, but the company remains committed to turning things around.
Retail store Kohl’s may be on the verge of closing, as it revealed a vast sales decline in its last quarter. Kohl’s finances in the last quarter of 2022 were down by seven percent overall. This period includes Halloween and the holiday season, which is typically very lucrative for retail stores, as many people buy presents for family and loved ones. Its net income fell to a loss of $273 million or $2.49 per share.
This is the latest blow for Kohl’s, as they have been dealing with a series of low sales since the COVID-19 pandemic. Unfortunately, this new decrease in sales has attracted the attention of its investors and board. It seems their unimpressive sales will continue into 2023, and they are predicting a weak outlook for this upcoming year, like every other retailer. They have indicated a decline of two to four percent throughout 2023.
Its new CEO attributed its disappointing holiday season sales to inflation. But it isn’t all bad; they have successfully introduced Sephora into many locations, and it plans to expand this partnership by opening a beauty section for the retailer in all of its over 1,000 stores. But while that partnership was a great business move, they have lost their footing in many other categories. Sales picked up towards the end of the fourth quarter of 2022, with Sephora being implemented in stores and with the start of holiday sales. Internet-based sales comprised nearly 40 percent of their overall yearly sales but declined by 12 percent.
While investors are becoming impatient with the loss of profits from the retail titan, their newly appointed CEO asked for patience as he tried to turn the company around. Trying to save such a massive business that has had flagging sales for a long time in such a volatile economy is a challenging task.
Even during the pandemic, when spending was high, especially for e-commerce, Kohl’s still reported a spending drop of 15.4 percent, and profits decreased quickly by 203 percent. Even with a leadership change, Kohl’s was losing the faith of their investors.
During the summer of 2022, there were countless reports that Kohl’s was selling their business to the Franchise Group, which owns The Vitamin Shoppe, as they felt they could not pull the company back. This takeover was backed massively by its investors, but ultimately Kohl’s felt they had a little more fight left in them.
With a fresh, new CEO at the wheel, Kohl’s has still left 2022 with reduced profits. While still on the brink of going out of business, Kohl’s hopes that a boost in profits will help them have a more stable future.
Along with low sales, like many businesses, they were left will a mountain of unsold inventory that was extremely popular over the pandemic. They have 11 percent more stock available than last year, but no one to buy it. While it will have to complete a massive turnaround, it is still valued at over $3 billion on the stock market. Hopefully, there is still a future for them, but only time will tell.
