Kohl's Q1 Net Falls 15 Percent; Sets "Greatness Agenda"
MENOMONEE FALLS, Wis.-In a quarter in which the company failed to achieve its sales goals, Kohl's posted first-quarter net income of $125 million, down 15 percent from a year ago.
Net sales fell 3.1 percent to $4.1 billion, including a decrease in same-store sales of 3.4 percent in the quarter, which ended on May 3. During a conference call this morning to financial analysts, Kevin Mansell, Kohl's chairman, president and CEO, said sales were below the retailer's expectations, and added that home in particular underperformed the company's total. Mansell added that soft home was one segment of strength in the quarter.
Gross margin gained 37 basis points in the quarter, to 36.8 percent. Selling, general and administrative expenses edged up 0.3 percent in dollars and 183 basis points as a percentage of sales, to 24.6 percent.
During the call, Mansell said the company is launching a company-wide initiative called the "Greatness Agenda," with the intent to improve sales and profitability. The program's five "pillars" include:
o"Amazing product": a renewed focus on providing the right merchandise mix
o"Incredible savings": efforts to help customers get more from every dollar they spend at Kohl's
o"Easy experience": investments making the shopping experience more seamless for Kohl's customers, including mobile and in-store technology
o"Personalized connections": efforts in building lasting relationships with Kohl's customers through localized merchandise and involvement in the communities where its stores are located
o"Winning teams": a new commitment to hiring and training engaged and results-oriented associates in stores
Mansell described this as Kohl's "longer-term" strategy. "We need to accelerate the results from the 'Greatness Agenda' quickly, especially on the sales line," he said.