Kohl’s Digital Sales Surge 58 Pct Amid The Pandemic’s Digital Shift

Kohl’s Inc. reported Tuesday (Aug. 18) that digital sales had surged 58 percent in Q2 compared to last year as the retailer’s net sales fell 23 percent amid the pandemic.

“COVID has accelerated important movements that have been underway for some time,” Kohl’s CEO Michelle Gass said on a call with analysts. “Customers are adopting more active and casual lifestyles, and they are shopping more digitally.”

Gass said Kohl’s stores are “increasingly supporting our digital business, serving as a critical fulfillment hub for ship from store and customer pickup.” The company also noted that it has profitable and easy-to-access off-mall stores, which are in the suburbs and near shoppers.

The executive also noted that digital marketing efforts had been an essential tool for growth. In Fall 2019, the retailer brought digital search in-house. Furthermore, Gass said the retailer is using machine learning to drive bolstered search results and media buying.

Gass also said the firm would be rolling out a new, more integrated rewards program throughout the country in September. “We saw positive results in our pilot and are confident that this new program will further enhance our position as a leader in the industry,” Gass said.

However, Kohl’s moved the Amazon Returns area to the back of its stores, which Gass said was to allow for increased social distancing and to bolster safety. In April 2019, Kohl’s announced that all of its stores would be accepting returns for Amazon shoppers beginning in July of that year.

Pandemic Impact

May was the most challenging period in the quarter, according to Gass, as a majority of Kohl’s stores were shuttered for most of the month. Kohl’s experienced a formidable rebound in June, with most of its stores reopened and digital’s momentum remaining.

However, the retailer experienced some sales deceleration from June’s strength in July as COVID-19 concerns increased in areas of the country where cases have been on the uptick.

In terms of the end of the year, Gass indicated that this holiday season would be “like no other.” For example, the retailer has decided to be closed on Thanksgiving Day.

As for its overall results, Kohl’s reported an adjusted non-GAAP net loss of $39 million (25 cents loss per share) on $3.21 billion in net sales. The results exceeded analyst expectations of 83 cents loss per share on $3.09 billion in revenue.

“We are a well-disciplined operator, leveraging our strong financial position to effectively navigate through this crisis,” Gass said.