Kohls 2Q15 Earnings Call Notes

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Comps up 0.1%. Not pleased but three straight quarters of positive comps

Comp sales increased slightly in the quarter at 0.1%. Though we aren’t satisfied with the level of the comp sales, we are pleased that we are starting to show come consistency in our sales results. This is the first time since 2011 that we have achieved three consecutive quarters of positive comps.’

Sales fell short because of lower season demand, tax free shift and later start to back to school

“sales in the quarter fell short of our original expectations. That was driven by a modestly lower level of seasonal demand over the quarter, a larger than expected tax-free shift and a later than expected back-to-school selling start.”

Started to see strength in back to school in August

“we have started see some strength in our back-to-school business as we have been through in August.”

Texas and Houston were weak

“Yes, Texas and primarily the Houston market. I’m sure that’s not any different for most people with significant businesses down there. I spoke with our regional manager down there and I saw obviously some of the weather issues they have with all the rain they had this summer. It hurt a little bit, but that’s a market that’s been tougher for us this year, that’s for sure.”

Nike helping top line and promotional stance helping margin

“Nike is not only providing great benefit on the sales line, but with their stance on promotional environment we’ve made a significant amount of more gross margin on that, so that’s providing some tail winds from that perspective. But through the spring season we’re up like I said, about 5 basis points.’

Buy online pickup in store is the best thing that ever happened in e-commerce

“Well, I could tell you BOPUS is the best thing that ever happened in e-commerce. So we don’t break out e-commerce sales anymore, but implicit in our three year plan back in October was a online generated order growth of about 20% a year. We’re doing better than that this year. But Buy Online, Pick Up In Store from a profitability is the best thing you can get, because you’re not shipping it, so you save the $5 to $6 per package that it costs to ship it to the house and we’re seeing attachment sales of about 20% to 25% depending on the time of the week.’

When something like Prime Day happens we’re aware and tailor our elements to offset

“if you’re alluding to things like Prime Day by Amazon or that, no. I mean I think what happens on those kinds of things is all retailers are sensitive and aware about promotion in the space and you inevitably therefore strategize and target your own elements to offset, to ensure that you don’t get hurt”

Real estate is just one asset like all the other assets we have

“real-estate is one of the assets that we have like all of the other assets we have. We are always reviewing what the options are that would maximize shareholder value, and that’s under constant review, it’s not necessarily focused on today’s events or the last three months events, it’s just a regular course of good governance and we’ll continue to do that.”

Going to be spending more money in digital than print for the first time

“the fall season, for the first time we are going to be spending more money in digital than we are in print. That’s were our customers are doing their research, whether or not they purchase online from whatever device they are using, they are definitely using the research to make their purchasing decision. So that’s important.”

Doesn’t seem like it’s going to be a strong outerwear season from a weather perspective

“Yes, outerwear we were really conservative. We all get the same forecast that you guys seem to get. So it doesn’t seem like it’s going to be an extremely strong outwear season from a weather perspective. So we’ve planned that down accordingly.”