Kohl’s Betting on E-commerce and Under Armour Boost
The retailer is looking for the activewear addition and investments in online shopping to improve traffic and lift sales.
After a year of sluggish traffic, store closures and shrinking profits, Kohl’s Corp. is looking to its multibillion dollar investment in online shopping and a new partnership with Under Armour for a shot in the arm.
The Wisconsin-based retail chain inked a deal with Under Armour last year to bring the activewear brand into stores with offerings for women, men and children, with a rollout set for the spring season this year, hoping the addition will boost sales and traffic, which lagged last year.
Kohl’s chief executive officer Kevin Mansell said Under Armour, which is having its own troubles lately, will further drive sales in the store’s activewear category, one of its best performers for the year, and increase comparable-store sales by as much as 1 percentage point.
“We expect the launch of Under Armour will drive [national brand] penetration even higher and project it to be a significant enough business in year one,” Mansell told investors during a call with analysts discussing the company’s year-end results.
Beyond the Under Armour brand injection, Kohl’s is looking to bet the benefit from what Mansell referred to as a “multiyear, multibillion dollar investment in digital technology” aimed at increasing online sales, online order fulfillment and delivery speed and omnichannel capabilities.
“Online demand was up in the low teens for both the fourth quarter and for the year [and] our ship-from-store capability enhancements along with buy online, pickup in-store enhancements have improved the customer experience and leveraged the power of our store portfolio,” Mansell said.
Kohl’s intends to be “aggressively marketing” buy-online, pick-up-in-store shopping this year, according to Mansell, who’s looking for the service’s penetration to “climb significantly.”
Fulfilling online orders with in-store inventory is also going to be ratcheted up over the year, and Mansell said this “is one of the most important initiatives in the company.”
A lot is riding on the company’s Under Armour and omnichannel efforts.
Kohl’s net income dropped by 14 percent $556 million last year as sales fell 2.7 percent $18.7 billion.
The retailer shuttered 19 stores over the year, contributing to the top line decline. And Mansell said the company only retained about one-third of those stores sales through nearby locations.
“This is less than we estimated,” Mansell said, adding that the company intends to monitor the impact of the closures for consideration in future “store optimization” efforts.
As for whether or not more store closures are imminent, Mansell didn’t say, but allowed that the retailer assumes “the uncertainty in our sector will continue.”
Kohl’s is planning on another year of sluggish sales. Its guidance for 2017 has sales down another 1.3 percent and comp-store sales down by as much as 2 percent.