Kohl’s turns to home décor as growth opportunity

Menomonee Falls, Wis. – Kohl’s is looking to ancillary areas for growth in home as the segment comes back down to earth following last year’s pandemic-fueled boom.

Sales in home tumbled 17% in the first quarter ended April 30 compared to a 30% increase in last year’s Q1. The company expects category demand to remain weak, CEO Michelle Gass told investors during a quarterly review call.

“We are adjusting to the new normal and continuing to pursue incremental areas such as outdoor furniture, expanded décor, kids bedroom furnishings and the pet category,” she said. “We will also leverage our pricing elasticity model, ensuring we stay competitive in value while taking price where it’s appropriate.”

Kohl’s is planning a significant expansion in home décor this fall and is focused on building out categories where it has relatively low share.

It’s also looking to the Kohl’s/Sephora partnership to help drive the top line and comps. Sephora shops are now in 200 stores – which have also refreshed their layouts – and the Sephora set will expand to 600 stores by late summer. Stores that have already added the beauty section are drawing new customers who are younger and more diverse, with 25% of Sephora shoppers visiting Kohl’s for the first time.

“They’re shopping about [two times] more than the typical customer. And we’re getting a lift to the basket. Over half have at least one other item in the basket,” said Gass. “This is a sea change for the company.”

Although the first quarter got off to a strong start with positive low-single digits comps through late March, sales weakened considerably in April as the business lapped last year’s stimulus and an inflationary consumer environment. Total company comp fell 5.2%.

Executives expect to return to positive comps as sales build sequentially through the remaining quarters of the year. But the company cut its full-year guidance today. Net sales are now forecast to be flat to up 1%, compared to prior guidance of up 2% to 3%.

In the meantime, Kohl’s potential acquisition is moving forward. The company has laid out specific procedures for the submission of actionable bids and expects to receive them in the coming weeks, said Gass.


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