Kohl’s is closing 18 stores due to sluggish sales. Profits for the retailer reportedly dropped by 20 percent during the fourth quarter of 2015. Like Target, Kmart and Sears, who also recently announced store closures, poor sales on cold-weather clothing and goods are blamed for missed sales projections. Walmart also announced closures of some of its under-performing, smaller stores earlier this year.
Kohl’s stores that had been open just one year, often referred to a “comp-stores,” saw sales increases of only.4 percent to $6.4 billion during the fourth quarter, the Cleveland Plan Dealer reports. The fourth quarter is traditionally the most important time of the year for retailers.
Store closings signal change at Kohl’s https://t.co/BorRrNsqnX
— Private Capital LLC (@PriCapLLC) February 26, 2016
Black Friday, the biggest shopping day of the year, was given its nickname not because women head out to the shopping mall before the sun comes up the day after Thanksgiving, but because it is the time of year when retailers are first operating in the black and earning a profit.
During the Christmas season, sales vastly increase and the days and weeks following the holiday millions of shoppers spend their gift cards and scoop up sale items as stores prepare for tax season and the influx of spring merchandise. The fourth quarter of 2015 ended on January 30 of this year.
The Kohl’s sales drop during the fourth quarter was significant compared to sales during the same time period as 2014. Some of the Kohl’s stores remained open from 6 a.m. on December 19 through 6 p.m. on Christmas Eve two years ago to increase extra sales.
Kohl’s is based out of Menomonee Falls, Wisconsin. The exact locations of the 18 stores slated for closure will be publicly announced by the end of March, according to a statement released by the Kohl’s Corporation. The 18 Kohl’s stores which will be shuttered forever represent just 1 percent of its total brick-and-mortar stores in 49 states. The company currently boasts a grand total of 1,164 stores.
The company’s earnings per shared are down 14 percent from last year, but Kohl’s still ended the final quarter better off than some retail industry analysts had anticipated. Net income for the corporation reportedly fell to $296 million in the fourth quarter. During the 2015 retail year, sales at new stores reportedly increased 0.7 percent to $19.2 billion. In 2014, the same type of stores experienced a 0.3 percent drop to $19.0 billion in sales. Total profits for 2015 reportedly fell 22 percent to $673 million and shares dropped 18 percent to $3.46 per diluted share, Yahoo Finance reports.
— Dayton Daily News (@daytondailynews) February 26, 2016
Here’s an excerpt from a statement made by Kohl’s Chairman, President and Chief Executive Kevin Mansell, about the 18 closing stores.
“We believe that the strategic framework of the Greatness Agenda is working as evidenced by our achievement of five consecutive quarters of positive comparable sales increases. I am particularly encouraged by the 4 percent increase we saw between Thanksgiving and Christmas. At the most competitive time in retail customers were choosing Kohl’s This strength, however, was substantially offset by softness in early November and in January, when demand for cold-weather goods was especially low, resulting in a quarterly comparable sales increase of 0.4 percent, which was below our expectations.”
The decision to close 18 stores will reportedly save the company about $45 million in expenses and approximately $10 million in annual depreciation. Kohl’s Corporation also noted that an “organizational realignment” of its corporate offices occurred earlier this month.
The store closures will leave hundreds of employees in search of work. The struggling retail market, and the closure of stores which offered similar jobs, may make it very difficult for the employees to secure new employment. The economy and job creation remain high-priority topics of 2016 presidential candidates in both parties.
[Image via Justin Sullivan/Getty Images]