Kohl’s Inc.’s active business increased almost 20 percent for the third quarter, representing an acceleration of its year-to-date trend.
“Both apparel and footwear categories in Active were strong and this was driven by large increases in both Nike and Adidas, as well as continued strong performance from Under Armour,” said Kevin Mansell, Kohl’s CEO, on a conference call with analysts.
Under Armour was launched at the chain earlier this year.
Mansell added, “We continue to gain market share in Active and we expect the very strong holiday performance in both Active apparel and footwear categories.”
Mansell also noted that the retailer’s national brand penetration rose to 56 percent for the quarter, up 300 basis points. The CEO said, “This was driven primarily by the Active growth, but we also had growth in several other important national brands, including Levi’s, Carter’s, Van Heusen, Tag Heuer, Columbia and Fitbit. We also launched the Clarks footwear brand to further expand our footwear offering.”
In the Q&A session, Mansell noted that the Active business overall has grown to about mid-teens percentage of its overall mix. He added, “We have aspiration of it going higher as customers continue to move into that lifestyle. So I think we’re well positioned to take advantage of that, for sure.”
Kohl’s private brand performance “saw significant improvement and substantially all brands reported improve trends.” This was driven by the growing impact of speed-to-market efforts and improved performance of its Jumping Beans children’s brand at back-to-school and the relaunch of its Apartment 9 brand.
He added that its exclusive brand performance continued to lag the total, primarily because it’s been paring down brands and categories in that area of the business. Mansell added, “Vera Wang and Lauren Conrad grew by double digits for both the quarter and year-to-date.”
In categories, men’s, footwear, kids and home all reported positive comp increases in the quarter. Its core women’s business was negative, but the trend improved, particularly in its private brands. The accessories category continued to lag the company, down mid single digits.
Companywide, Kohl’s earnings declined 19.9 percent to $117 million, or 70 cents a share, just missing Wall Street’s consensus target of 72 cents. On an adjusted basis including non-recurring charges in the year-ago period, earnings would have been down 17.6 percent
Sales inched up 0.1 percent to $4.33 billion. Comparable stores sales were up 0.1 percent versus a decline of 1.7 percent a year ago.
Said Mansell, “We are pleased to report an increase in comp sales for the quarter as the traffic momentum we saw in the first half of the year continued. We saw strong results during the back-to-school season, achieving a low single-digit positive comp. The middle of the quarter was soft as we experienced disruptions from the hurricanes and other unseasonal weather. The quarter closed with strong sales in the second half of October.”
Despite missing Wall Street’s targets, Kohl’s still raised the low end of its full-year guidance. Excluding the benefit of a tax settlement in the latest quarter, the company expects diluted EPS of $3.60 to $3.80, compared to its prior guidance of $3.50 to $3.80 per diluted share.
Photo courtesy Kohl’s
