Kohl’s Net Plummets in Q1
Posted on May 12, 2016 by
MENOMONEE FALLS, Wis.-Reduced sales and costs for impairment and store closings sent Kohl’s bottom line into an 86.6 percent freefall in its first quarter ending April 30.
Net income totaled $17 million. The expense for impairment and store closings totaled $64 million, but even taking that charge out of the equation, Kohl’s first-quarter profit fell by almost 34 percent.
Net sales fell 3.7 percent to $4 billion, including a same-store sales decline of 3.9 percent. Home was the weakest product category in the quarter, with sales underperforming the rest of the company, according to Kevin Mansell, Kohl’s chairman, president and CEO, who spoke to retail analysts on a conference call this morning. Bedding, luggage and seasonal were outperformers in home, while other categories were “more difficult,” Mansell said.
“First quarter sales were challenging,” Mansell said in Kohl’s statement on its financials. “Despite the sales environment, we were able to manage our gross margin and inventory levels consistent with our expectations as we took the markdowns necessary to clear excess inventory.”
Gross margin also hurt the bottom line by dropping 139 basis points to 35.6 percent. Selling, general and administrative expenses decreased 0.8 percent in dollars but gained 74 basis points as a percentage of sales to 25.4 percent. “We managed our expenses effectively throughout the quarter as every area contributed to our savings versus our plan,” Mansell said.
Last year, Kohl’s ranked 12th on HFN’s list of the top 50 retailers of home furnishings with $3.4 billion in home furnishings sales in 2014.