Kohl’s to Streamline Operations with Store Closures and Facility Shutdown
Kohl’s Corporation KSS has revealed its plan to shut down its San Bernardino E-commerce Fulfillment Center and 27 underperforming stores by 2025. This move is part of the retailer’s strategy to improve operations amid intense competition in the retail sector.
The San Bernardino facility has been in operation since 2010 and will close its doors when its lease runs out in May. This decision represents a shift in Kohl’s fulfillment approach. Advancements in technology now enable the company to process orders directly from its store locations, eliminating the need for the fulfillment center. Store closures are also indicative of Kohl’s ongoing battle with weaker sales in certain markets.
While Kohl’s expresses confidence in its overall store portfolio, these shutdowns, though few in number, highlight the persistent challenges the company faces. Over the past three months, Kohl’s shares have fallen by 29.1%, contrasting sharply with the industry, which has seen a growth of 7.6%.
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Key Insights on Kohl’s Performance
As a Zacks Rank #5 (Strong Sell) company, Kohl’s continues to endure the effects of a tough economic environment. Its third-quarter fiscal 2024 results did not meet expectations, characterized by weak sales in the apparel and footwear sectors. Although the company performed well in areas like Sephora, home decor, gifting, and saw the opening of Babies “R” Us locations in 200 markets, these successes were insufficient to counterbalance declines in core segments.
During its latest earnings call, Kohl’s management indicated a downward revision to its fiscal 2024 forecast. This adjustment reflects disappointing performance in the third quarter and concerns over a highly competitive upcoming holiday season. For fiscal 2024, Kohl’s expects a net sales decline of 7-8%, a change from the prior estimate of 4-6%. Furthermore, projected earnings per share have been revised down to $1.20 to $1.50 from an earlier range of $1.75 to $2.25 for the full year.
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Deckers DECK, a footwear and accessories retailer, currently holds a Zacks Rank #1 (Strong Buy). Deckers has achieved an average earnings surprise of 41.1% over the past four quarters. Interested readers can view the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Deckers’ sales and earnings in the current financial year suggests growth of 13.6% and 13.8%, respectively, compared to the previous year.
The Gap, Inc. GAP is a leading international specialty retailer that offers a wide selection of clothing and personal care items. Currently, GAP also holds a Zacks Rank #1.
The Zacks Consensus Estimate for Gap’s fiscal 2025 earnings and sales indicates growth of 41.3% and 0.8%, respectively, in comparison to fiscal 2024 results. Additionally, GAP has achieved a remarkable trailing four-quarter average earnings surprise of 101.2%.
Dillard’s, Inc. DDS, a department store retailer, is another with a Zacks Rank #1. Dillard’s has delivered an average trailing four-quarter earnings surprise of 8.8%.
The Zacks Consensus Estimate for Dillard’s financial year indicates expected declines of 5.2% in sales and 21.9% in earnings compared to levels from the year prior.
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Kohl’s Corporation (KSS): Free Stock Analysis Report
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