By Neil Saunders
With expectations running high, Kohl’s comparable holiday sales growth of 1.2% has disappointed some investors. However, when placed in a wider context, the results are reasonable. Kohl’s posted stellar growth of 6.9% during the holidays of 2017, which made sales gains much more difficult to attain this year. That the company still posted positive same-store numbers is a victory of sorts.
Kohl’s executed well over the holidays. Assortments were strong over Thanksgiving and Black Friday, with plenty of solid offers to entice shoppers. The same is true of the Christmas period, where our tracking shows that Kohl’s benefitted from increased shopper numbers for both gifting and self-gifting, especially on apparel and athleisure.
The company’s omnichannel services also proved beneficial, with the convenience of buying online and collecting in stores proving a major growth area. While we believe that investment in omnichannel and the growth of digital may have impacted margins, Kohl’s has more than made up for this with lower discounting and efficiencies elsewhere. This is one reason why the bottom end of the earnings guidance range has been raised.
For us, the main takeaway from Kohl’s numbers is not that growth has come down a bit. This is to be expected. Rather, it is that Kohl’s is executing and delivering in a consistent way with some good progress on both the top and bottom lines. As sales comparatives soften after Q4, we expect growth to pick back up a bit as the company moves more fully into 2019.
Neil Saunders is managing director of research firm GlobalData Retail.