Kohls 4Q13 Earnings Call Notes

A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Comparable Comps down 0.4%

“Comp sales for the quarter decreased 2%. As a reminder, our actual comps and our guidance excluded the 53rd week in fiscal 2012. Some of our competitors, especially in specialty retail, report on the shifted calender, which excludes the first week of the 2012 fiscal quarter. On this shifted basis, our sales — our comp sales decreased 0.4% for the quarter.”

Weather, short holiday and our own problems contributed to challenges

“A shortened holiday shopping season and climate weather and our own operational challenges and our fulfillment centers all contributed to higher shipping costs as we use faster, more expensive shipping methods to fulfill our customers orders.”

November, December strong, January weak

“Sales for the combined November and December period were well above plan. This momentum did not carry into January as lower levels of clearance inventory resulted in sales which were significantly lower than our expectations.”

Non-weather affected regions did fine

“On a regional basis, the Southeast, West and South Central regions reported the strongest counts for the quarter, while the more weather-sensitive regions, the Northeast, the Mid-Atlantic and Midwest, underperformed the company average.”

Business pick up recently

“our business hasn’t been any different than everybody else, that’s reported already. It was pretty slow in the beginning of February and it’s picked up recently.”

This Michelle lady must be someone they think is pretty good

“there’s a whole series of initiatives that Michelle is focused on, from the way we deliver our marketing, literally in our print and in our broadcast to the loyalty initiatives and other initiatives that she’s working on, and it’s highly targeted towards expanding our reach. So as I said, our #1 priority is to identify ways for us to broaden the reach, to improve transactions. Loyalty is probably, right now, the #1 way we’re going to get there, but there are a whole series of other ideas that she’s working on. And we’ve had some success, she had some great success in a few instances in the fourth quarter, particularly around the Thanksgiving Day period and we benefited greatly from it.”

Making a push in loyalty

“as I said, I think Michelle’s excitement is focused around the delivery of loyalty, what does loyalty look like, how does it get engaged online, what are the benefits that are outside of just the transactional benefit of maybe getting on an additional $1 back on a purchase. And I think she’s pretty excited about some of the ideas that are being generated. There is a new level of loyalty marketing that is going to be launched this year and completing a new campaign. It looks totally different. The communication is totally different from what we’ve done, but it’s built fundamentally on the learnings that we had during the course of the test. So as you can hear, I’m very optimistic about loyalty.”

Seeing some green shoots

“we definitely have had some successes. Michelle likes to talk about those as green shoots, so things that she’s been able to focus on in a very short period of time with her team and create change, and we’ve seen some really exciting results around that. Probably the one that’s the easiest to understand that I’m sure you saw was our effort prior to the Thanksgiving event around the MAs and an effort with Jennifer Lopez, and that had tremendous amount of impressions and a tremendous amount of excitement generated and it translated into traffic and it translated into sales. Obviously, she knows full well that those small steps have to now translate into bigger steps. We have an initiative underway right now. One of the color trends of the season is, for sure, pink. And there’s an initiative that launched just at Presidents’ Day and has been ongoing around that. I think those kinds of things you’re going to see a lot more of, an awful lot about loyalty.”

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