As Sales Slow, Kohl’s Thinks Smaller

Disappointing sales for Kohl’s have got the retailer looking into smaller-format ideas.

The Wall Street Journal reports that yesterday (Feb. 25) Kohl’s Corp. posted a 20 percent decline in Q4 profit and announced that it was planning to close some of its poorly performing locations while testing out a smaller format store.

Although sales growth at established Kohl’s locations dropped from 3.7 percent in the fourth quarter of 2014 to 0.4 percent last year, the chain’s Chief Executive Kevin Mansell took the optimistic view, pointing out to WSJ that it was still the fifth straight quarter of increases.

“I am particularly encouraged by the 4 percent increase we saw between Thanksgiving and Christmas,” he told the outlet. “This strength, however, was substantially offset by softness in early November and in January when demand for cold-weather goods was especially low.”

According to the Journal story, Kohl’s intends to close 18 stores this year (which combined represent less that 1 percent of the company’s sales) in order to lower costs of overhead by approximately $45 million a year. As a result of those closures — plus organizational changes that were made at the corporate level earlier this month — the retail chain said that it anticipates about $150 million to $170 million in charges.

As for specific plans surrounding smaller format stores, WSJ shares that Kohl’s is aiming to open seven of them in different parts of the U.S. (akin to Walmart’s Walmart Express stores, an endeavor that company recently abandoned), in addition to two Off-Aisle pilot stores in Wisconsin and 12 outlet stores — the latter of which, the Journal story points out, signifies Kohl’s first move into the outlet space.