Kohl's department store drops brands as losses mount  (2024)

Kohl's announced Tuesday it would remove eight brands from its department stores following a major loss in the first quarter as the coronavirus lockdowns took hold.

The company said brands including Jennifer Lopez, Juicy Couture and Popsugar would be dropped from stores amid fears the demand for women's apparel would remain weak.

Kohl's has been hard-hit by the shutdowns with people turning away from shopping on non-essential items.

'Exiting them (the 8 brands) will create focus and clarity on the brands that will continue,' Chief Executive Officer Michelle Gass told a post-earnings call

'We're still highly committed to the women's business. In the short term, we're facing some challenges here.'

Kohl's, which has partnered with Jennifer Lopez for about a decade and began selling Juicy Couture in stores in 2014, will also cease selling Dana Buchman, Mudd, Candie's, Rock And Republic and Elle.

The brands dropped focused around women's apparel and the Marc Anthony Collection, from Jennifer Lopez's ex-husband, will remain in stores.

Department stores have struggled even before the pandemic as consumers shift to online shopping.

But the pandemic has added to the sector's woes and Kohl's was forced to close all 1,100 stores across the US as stay-at-home orders spread across the nation.

The company furloughed 85,000 employees, providing two weeks of pay and continuation of existing health benefits.

Kohl's reported a 24 percent surge in online sales in the quarter and more than 60 percent in April and said it had now reopened nearly half its U.S. stores as restrictions eased.

However, the shopping experience will be greatly changed, with Kohl's saying it would keep fitting rooms closed, reduce operating hours and encourage shoppers to maintain distance with one another.

Despite the increase in online sale, shares in the department store chain fell about 8 percent Tuesday morning after it reported a bigger-than-expected first-quarter loss.

'Our financial performance, like many other retailers, will be materially impacted by COVID-19 in 2020,' Gass said.

'While we have a fast-growing digital business, it has only replaced a small portion of the sales loss from our entire store base.

'There are customers in our stores and we're happy about that and we're encouraged by seeing the progressive improvement of the stores that have now been open two weeks… we've seen them ramp up in their second week,' she added.

For the quarter ended May 2, net sales fell about 44 percent to $2.16 billion and the company reported a net loss of $541 million.

This was down from around $3.8 billion during the same time in 2019.

Excluding items, it lost $3.20 per share, far worse than forecasts of a $1.80 loss, according to Refinitiv data.

While dropping the down-trending women's brands, Gass announced that the company will later this year introduce Los Angeles-based TOMS and Dodgeville-based Lands' End to its website and stores.

'Lands' End is an iconic brand and a market leader in the classic-casual lifestyle,' said Gass. 'Beginning this fall, we will offer the full Lands' End assortment on Kohl's.com as well as feature a shop-in-shop experience in 150 of our stores.'

The results follow bankruptcy filings by peers J.Crew, Neiman Marcus and J.C. Penney on the back of huge losses racked up in the two months since U.S. states began issuing stay-at-home orders.

In contrastWalmart and Home Deport released their successful first quarter earnings Tuesday.

Walmart sales have soared by 74 per cent and Home Depot sales have risen 7 per cent.

It highlighted the burgeoning gap emerging in the industry between firms offering items deemed essential amid the pandemic and those selling non-essential goods.

US retail giant Walmart has come out on top during the crisis as people stockpiled groceries and household items when states went into lockdown and turned to online shopping to avoid any risk of contracting the virus by visiting bricks-and-mortar stores.

Home Depot has also benefited from a change in habits in lockdown life as people stuck in their homes turn to DIY as a new hobby.

The mixed results from the retailers Tuesday led Wall Street to also record mixed results, just a day after the market had its biggest jump in more than five weeks.

The S&P 500 was trading flat off the back of the news, wavering between gains and losses for the first half of the day.

It is still downabout 13 percent from its all-time high in February.

Shares in Walmart gained 0.8 percent Tuesday, while Home Depot fell 1.4 percent and Kohl's plunged a dismal 8.2 percent following their earnings releases.

The tale of two retail industries is emerging as Americans have been hard-hit by the pandemic, with more than 33 million Americans filing a claim for unemployment benefit since the shutdowns began in mid-March.

And even those still in a job are spending with caution as fears rise that they could be unemployed in the next few months.

Data released last week by Visa revealed consumers are using theircredit cards only for groceries and drugstores as they attempt to cut back on their debt and increase savings amid the economic uncertainty

Signs that shopping habits will return to some sort of normalcy are emerging however, with GPS data revealing that visits to retail stores and counter service restaurants across the US are almost back to pre-COVID-19 lockdown levels.

The data, compiled by SafeGraph, shows that visits to bars, shopping malls and sit down restaurants are now slowly increasing after nearly all 50 states eased coronavirus lockdown restrictions.

The data also shows that the likes of Mississippi, Alaska, Alabama, Montana and Arkansas are the states showing levels of foot traffic that are closest to being normal.

Those five states have all lifted stay-at-home orders and businesses have reopened.