Kohl ປັບປຸງແລະກໍານົດທຸລະກິດຂອງຕົນຄືນໃຫມ່ໃນລະຫວ່າງວັນນັກລົງທຶນປະຈໍາປີ

Kohl’s Corp. is shrinking the box, going after the dress business and mining data science for the purpose of personalization, among other things. So said Michelle Gass, the retailer’s CEO in a far-ranging interview at the culmination of the company’s annual investor day. Kohl’s also introduced new long term financial targets of low-single digits percent sales growth and mid-to-high single digits percent EPS growth.

Gass said Kohl’s plans to grow Sephora, the beauty concept it’s been adding to locations to a $2 billion business across more than 850 stores while continuing to expand omnichannel capabilities with the launch of self-serve, buy online, pick up in store to all stores. The Kohl’s Card rewards benefit is being enhanced to 7.5% every day, and the retailer committed to net zero emissions by 2025.

Kohl’s has been testing and experimenting with small format stores for the last few years, so the retailer isn’t simply downsizing the Kohl’s experience from 85,000 to 35,000 square feet. “We’ve made sure we’re getting it right and staying true to the Kohl’s brand, by bringing in the relevant products, categories and brands to fill what that local community is looking for,” Gass told me. “The example I used, the Seattle area store, will have a bigger presence of the outdoor than you might have around the country. It’s also going to be an elevated experience with more storytelling and mannequins. We’ll be opening up this one this fall, and I’m really excited for customers to experience it.”

According to Gass, Sephora in-store shops have been positive for the company’s beauty business while providing a mid- single-digit sales lift to the overall store. About 25% of customers shopping Sephora are new to Kohl’s, and they’re younger and more diverse. “They’re exploring the rest of the store, so more than half the baskets have another item,” Gass said. “The most popular has been the active category, the women’s category.”

Kohl’s is on track to open Sephora in 400 doors this year, Gass said, adding that in a very short period of time Sephora will be in half of the retailer’s store base of 600 stores. “We’ll have more [locations] by the end of this year than they have of their own freestanding stores,” she said. “So the market of Sephora overall has markedly increased, and I’d say the partnership overall is going really well.”

One innovation discussed during the investor day was the launch of cross-company BOPIS, “an idea I’m really excited about,” Gass said. “It’s the idea of buying a beauty product on Sephora.com and being able to pick it up at a Kohl’s store.” The retailer has a similar partnership with Amazon where customers of the digital giant can make returns at Kohl’s units. “It’s extremely powerful and really speaks to the notion of our two brands coming together for a win-win, with each bringing their respective assets,” Gass said of Sephora. “In this case it’s a strong digital base and these customers now have the convenience of picking up at a Kohl’s, and guess what, now we’re driving more traffic and they get to see the rest of the store. We’re really confident about the $2 billion opportunity.”

Kohl’s continues to hone its image as the active and casual lifestyle destination. “When we first started going after the active category five-plus years ago, it was a category inside the broader Kohl’s concept. Now, what we’re saying is we want the whole brand to stand for the active and casual lifestyle, which includes categories like beauty. We’ve demonstrated our credibility and we’re partnering with the best brands in the business,” Gass said, citing Nike, Under Armour and Adidas. “Our partnerships have never been stronger. And in terms of our commitment, we were talking about Sephora. When we update a store with Sephora we’re also refreshing the entire store, we’re putting active right in the front. We’re adding space for active, and we’re getting elevated products.”

The casualization of fashion hastened by the Covid-19 pandemic and working at home isn’t going away, Gass said. “People want to continue to live comfortably,” she added. “They want to continue to live in an active way. Will they dress up a little more, will they go to dinner or a meeting that’s in the office? Maybe for a meeting that’s outside of their home office, but those core attributes of being comfortable will continue, and you can also look really stylish with your sneakers and denim, which is really trending. We’re focusing on meeting this customer need and focusing the business on it.”

At the same time, Kohl’s is going after the dress business in the context of the casual lifestyle category and wear to work dresses and dresses to wear on weekends. “You may not see many prom dresses at Kohl’s, but we’re going to have dresses you can wear to weddings. It’s all within the types of comfortable, accessible dresses that you would expect from Kohl’s but I would say, the new Kohl’s – elevated, fashionable and that sort of thing.”

Kohl’s is projecting its digital business to reach $8 billion in annual revenue, in part thanks to its continuing efforts to make it easier for visitors to find brands and shop on its web site. Kohl’s on Friday released its fourth quarter results, including total revenue in fiscal 2021 of $19.4 billion, up from $16 billion in 2020. For the three-month period ended Jan. 29, Kohl’s reported revenue of $6.22 billion, which was slightly less than Wall Street analyst estimates.

Gass has been under fire from activist shareholders Macellum Advisors and Engine Capital, which have argued that Kohl’s has underperformed other retailers such as Target, TJ Maxx, Macy’s. Kohl’s shares have risen just 6% over the past 12 months, compared with Macy’s stock, which soared 65%. The firms also have pressed for Kohl’s to unlock capital by selling off some of its real estate and leasing it back.

Macellum on Friday called Kohl’s fourth-quarter results disappointing, saying it remained skeptical of the retailer’s future given the current board of directors. But the retailer released a brighter revenue outlook for 2022 despite ongoing supply chain obstacles. The retailer also said last week it planned to double its annual dividend and buy back at least $1 billion of its stock this year.

Gass said Kohl’s adversaries aren’t giving the retailer credit for the gains it’s made. “If you look at the last year, we made a major pivot and restructure to the business,” she said. “It was a pivotal year for us. Our results speak for that. We posted all-time record earnings per share of $7.33, well ahead of our 2018 pre-pandemic high of $5.60. We beat the Street on operating margin of between 7% and 8%, by delivering 8.6 % We’re returning significant value to shareholders, which speaks to our conviction on the health of the business, and now we’re stepping forward with a very exciting growth agenda. I can just say that we see a lot of value in our company we see the momentum on these initiatives and we’re very confident of the future.”

Part of that confidence comes from the partnerships Kohl’s has forged, not only with Sephora, but with Amazon. The retailer accepts returns of the digital giant’s products, which “has brought in a lot of new customers,” Gass said. “We’ve been very pleased with our Amazon partnership, which is now a couple of years in the making. What we’ve seen over time is that conversion is increasing, so the percent of customers that are crossing the aisle and buying something is increasing. One of the things Kohl’s does well is we build great partnerships and Amazon is a good example where we continue to get the customers and traffic and [customers] are getting a world class experience, the net promoter scores are phenomenal.”

Gass called the Amazon tie-in “truly a win-win. And we’re continuing to look for ways to drive that customer loyalty to Kohl’s. We were talking about Sephora and one of the innovative things we’re going to try is at the point where a customer is making an Amazon return, we’re going to give them an incentive to go and visit the Sephora shop. We’re thinking about that traffic a little bit differently, but that partnership has been really good for both companies.”

Kohl’s is also using data science to help engage with customers more efficiently and provide greater relevance. It’s an opportunity that threads throughout the company, Gass said, adding that the retailer will use data science to increase personalization and accelerate localization to its entire store fleet over the next two years, and will also be optimizing data and analytics to create more relevant customer experiences, drive higher revenue, higher margin, and greater asset efficiency.

“It’s how we assort the store,” she said. “We have been piloting that. We’re seeing very strong results. Sometimes these are pretty micro changes, it might be a couple more fixtures for a brand or a product, but with the kind of business we’re in that makes a difference, so literally every store is going to have a different level of assortment.”

Marketing will also get a boost from data science, Gass said, noting that the goal is to spend less but spend more impactfully with personalization a key component. “We email millions and millions of customers,” the CEO said. “We have 30 million people in our loyalty program. Ultimately, the vision is how do you customize every email with products and offers. Humans can’t do that when you’re talking about tens of millions of people, but machines can when you’re talking about data science.”

Off-the mall locations will continue to be a point of differentiation for Kohl’s and a strong asset for the retailer’s partnerships, whether it’s with Sephora, Amazon or new brands. “What they love is our powerful omnichannel capabilities so that include the off-mall presence, which is super-convenient for customers as well as our digital platform,” Gass said. “They really work together, so tactically speaking, it’s doing things like Amazon returns or BOPIS or curbside pick-up , but I think the real strategic value is when current and new brand partners innovate and how we harness the omnichannel capability together, the 1,200 stores across the country, 1.7 billion visits to the web site. We create phenomenal reach for brands, companies and partners so we’re looking to continue to grow the business and innovate based on that strong platform.”