Kohl’s Corporation’s outgoing CEO, Tom Kingsbury, said in a media release dated Tuesday, November 26, that third-quarter results did not meet expectations as sales remained soft in the retailer’s apparel and footwear businesses.

“Although we had a strong collective performance across our key growth areas, including Sephora, home decor, gifting, and impulse, and also benefited from the opening of Babies “R“ Us shops in 200 of our stores, these were unable to offset the declines in our core business. Importantly, we delivered gross margin expansion and managed expenses tightly in the quarter,” Kingsbury noted. “We are not satisfied with our performance in 2024 and are taking aggressive action to reverse the sales declines. We must execute at a higher level and ensure we are putting the customer first in everything we do. We are approaching our financial outlook for the year more conservatively given the third quarter underperformance and our expectation for a highly competitive holiday season.”

CEO Transition Process
Effective January 15, 2025, Kingsbury plans to step down as CEO. He will stay working with the company in an advisory role to the new CEO and retain his position on Kohl’s Board of Directors through his retirement in May 2025. The Board appointed retail veteran Ashley Buchanan as CEO and Board member, effective January 15, 2025.

Third Quarter 2024 Results
(comparisons refer to the 13-week period ended November 2, 2024, versus the 13-week period ended October 28, 2023.)

  • Net sales decreased 8.8 percent year-over-year to $3.5 billion, with comparable sales down 9.3 percent.
  • Gross margin as a percentage of net sales was 39.1 percent, an increase of 20 basis points.
  • Selling, general & administrative (SG&A) expenses decreased 5.1 percent year-over-year to $1.3 billion. As a percentage of total revenue, SG&A expenses were 34.8 percent, an increase of 125 basis points year-over-year.
  • Operating income was $98 million compared to $157 million in the prior year. As a percentage of total revenue, operating income was 2.7 percent, a decrease of 120 basis points year-over-year.
  • Net income was $22 million, or 20 cents per diluted share; this compares to net income of $59 million, or 53 cents per diluted share in the prior year.
  • Inventory was $4.1 billion, a decrease of 3 percent year-over-year.
  • Operating cash flow was a use of $195 million.

Nine Months Fiscal Year 2024 Results
(comparisons refer to the 39-week period ended November 2, 2024, versus the 39-week period ended October 28, 2023.)

  • Net sales decreased 6.1 percent year-over-year to $10.2 billion, with comparable sales down 6.4 percent.
  • Gross margin as a percentage of net sales was 39.4 percent, an increase of 42 basis points.
  • Selling, general & administrative (SG&A) expenses decreased 3.4 percent year-over-year to $3.8 billion. As a percentage of total revenue, SG&A expenses were 34.8 percent, an increase of 95 basis points year-over-year.
  • Operating income was $307 million compared to $418 million in the prior year. As a percentage of total revenue, operating income was 2.8 percent, a decrease of 79 basis points year-over-year.
  • Net income was $61 million, or 55 cents per diluted share; this compares to net income of $131 million, or $1.18 per diluted share, in the prior year.
  • Operating cash flow was $52 million.
  • Long-term debt was reduced by $113 million through the redemption of the remaining 9.50 percent notes due May 15, 2025.

Updated 2024 Financial and Capital Allocation Outlook
For the full year 2024, which has 52 weeks compared to 53 weeks in full year 2023, the Company currently expects the following:

  • Net sales: A decrease of 7 percent to 8 percent.
  • Comparable sales: A decrease of 6 percent to 7 percent.
  • Operating margin: In the range of 3.0 percent to 3.2 percent.
  • Diluted EPS: In the range of $1.20 to $1.50 per share.
  • Capital Expenditures: Approximately $500 million, including expansion of the Sephora partnership and other store-related investments
  • Dividend: On November 13, 2024, Kohl’s Board of Directors declared a quarterly cash dividend on the company’s common stock of 50 cents per share. The dividend is payable December 24, 2024 to shareholders of record at the close of business on December 11, 2024.

Image courtesy Kohl’s Corporation