Kohl’s reported Q3 revenue of $4.33 billion, a 0.1% year-over-year increase, while same-store sales also climbed 0.1%, a much-improved performance from the 1.7% decline seen in Q3 2016.
The comparable sales growth is important given that Kohl’s had seen six straight quarters of declines, and Wall Street had predicted a seventh. Yet in the midst of the good news, the department store saw a net income decrease of 20% to $117 million, with an increase in merchandising expenses taking some of the blame.
As longtime CEO Kevin Mansell prepares for his departure from the company in May 2018, the retailer has sought help from some of retail’s most popular brands to lure traffic into its stores. On Oct. 18, Kohl's launched a joint venture with Amazon, adding new Amazon Smart Home Experience spaces in 10 Kohl's stores in Los Angeles and Chicago, as well as offering Amazon returns in 82 Kohl's stores. Kohl’s also has continued offering Under Armour products in its stores, which it started selling in early 2017.
These and other factors may combine to give Kohl’s a happy holiday season in the current quarter. “We expect a rebound in comps in Q4 (1.0%),” said Chuck Grom, Research Analyst at Gordon Haskett in commentary provided to Retail TouchPoints. “This is driven by an acceleration in digital sales (25% vs. approximately 15% year-to-date); the release of seasonal demand; the natural mix lift from home sales, which rose mid-single digits in Q3 (approximately 20% of total sales); continued gains from competitor door closings and associated gains from BOPIS and Smart Cart efforts.”