Menomonee Falls-based retailer Kohl’s Corp. reported a nearly 70% increase in net sales for the first quarter and raised its guidance for top and bottom line improvements for the full year.
But even with a quarter that exceeded expectations, executives said the company still wanted to be cautious in raising the outlook for the remainder of the year.
“We feel really good about the customer being ready to spend,” Michelle Gass, chief executive officer of Kohl’s, told analysts on Thursday. “Candidly, the reason we guided as we did is there’s just still uncertainty out there.”
Kohl’s raised its net sales guidance from a mid-teens percentage increase to a mid-to-high teens percentage increase. The forecast would still leave the company short of its 2019 net sales level, which would require a nearly 26% increase from last year.
The company did report net sales of $3.66 billion for the quarter, up from just $2.16 billion last year. Of course, the 2020 first quarter included the onset of the COVID-19 pandemic, which forced Kohl’s and other retailers to close their stores.
In 2019, net sales totaled $3.82 billion in the first quarter.
Gass said that net sales were ahead of March and April from 2019 this year while February was hampered by weather.
“That has continued into May, so we feel good,” Gass said of the positive sales trends, noting Kohl’s benefited from the arrival of spring, vaccine rollout, stimulus payments to consumers and its own strategy.
Part of Kohl’s strategy, which BizTimes detailed in a recent cover story, includes an increased emphasis on casual and active styles and Gass said consumer interest in those kinds of apparel has continued even as the economy reopens.
“As more people return to work, resume travel and attend events and gatherings, they are seeking out new and updated apparel while maintaining the preference for casual comfort, which fits squarely into the product categories we are taking a leadership position in,” Gass said.
She said Kohl’s has seen an acceleration in shoppers returning to stores, but digital sales were also up 14% compared to 2020 and 40% compared to 2019. Digital now accounts for 30% of company sales, although 40% of those orders are still fulfilled by Kohl’s stores.
Even with the positive results, Gass and Jill Timm, chief financial officer of Kohl’s, said the company felt it was prudent to take a more cautious approach to guidance.
“It’s still early in the year and there remains uncertainty around how the recovery unfolds, duration of the stimulus tailwinds for the retail industry and supply chain headwinds,” Timm said.
She said the company feels like it has managed supply chain challenges, which are hitting a number of industries, well, but it is unclear how long they will last.
Some of the steps the company has taken include prioritizing orders for products included in Kohl’s ads and events, adding drivers to increase picks from ports, increasing the frequency of store deliveries, adding carriers to reduce transit time and prioritizing shorter transit times for products in key categories like women’s, Timm said.
