Kohl relief investors give a 20% increase to the title – but the CEO plan to put “growth” is far from being concluded

On Wednesday, the shares therefore increased by 20% when Kohl’s had a rare good news to share with Wall Street: an adjusted profit much better than expected, thanks to the cost discipline and the leaner inventory, which led him to increase his annual forecasts. It is clear that investors will win victories where they can find them, because the victories were far away and rare for the channel. (Actions have only been recovered slightly from 30 years of launch this spring.)

In addition, the Big Stock Pop is largely because approximately a third of Kohl’s actions are held and the stock was a meme recently, which makes it very sensitive to speculative negotiation.

The fact remains that Kohl is in difficulty: net sales fell 5.1% in the quarter enclosed on August 2 and should still drop for the year between 5% and 6%, slightly less horrible than the fork from 5% to 7% in its previous forecasts. Kohl’s has lost millions of customers and its activities are 20% smaller than in 2019, while TJ Maxx, Walmart and Target are much more important. Last year, Kohl saw the sales in all the categories it sells, with the exception of Sephora stores, fell from a two -digit percentage.

The acting CEO, Michael Bender, director of Kohl, took the reins in May after Ashley Buchanan was ousted for three months in his work. (It will not be surprising that Kohl drops “the interval” soon, assuming that Bender wants work permanently – it seems unlikely that the company wants to carry out another CEO search.)

Bender has the board for him. Cost discounts and tight stocks, which protect the margins against having to update the goods that Kohl does not end up selling, gives financially in the Kohl breathing room to take another stab and turn. But some of the movements that Kohl has made to protect profits can actually hurt sales. A lower inventory helps margins by reducing the quantity of goods at reduced prices if it is not done with buyers, but this can also mean lost sales and visually unattractive empty shelves. Lighter staff means lower costs, but can also mean disorderly stores and long expectations to check that can frustrate a buyer and foment low morale among employees.

“It is not that this direction does not have the will to improve or the desire for change. The challenge lies in an inability to execute at an operational level, “explains Neil Saunders, Managing Director of Globaldata.

New CEO, new opportunity

Bender, director since 2019 and retail director who had the CEO of the Eyemart Express optical retailer a few years ago, was able to settle quickly thanks to his knowledge of the interior functions of Kohl. During the May call for Kohl winnings, Bender was only four weeks before employment and postponed his director to explore the details of the first quarter.

But during Wednesday’s call, he presented his three -part strategy to win back Kohl customers. The first priority is an accent renewed on what Kohl loyalists revolve, such as small clothes and jewelry, as well as the categories of de-insist aimed at winning new customers like some of its home products.

“We know that our customers come to Kohl while waiting for the products they need, their families and their house,” said Bender at a conference call.

Bender also said that due to the economy, customers gravitated more towards “value”, the language of the retail industry for articles at a lower cost. To this end, Kohl’s strives to revitalize some of its store brands, which offer lower prices and higher margins if buyers take them. (Kohl’s has been trying for years to revitalize your private brand business to mixed results.) In addition, Kohl’s will allow customers to use coupons for a wider range of the items it sells.

Recognizing what was obvious for visitors to Kohl stores for a while – that they can be chaotic and Bla – the company aims to improve the visual experience within its locations. “We know that we currently have an incoherent experience in store without a unifying point of view of what we want the customer to feel when they walk in the store,” said Bender.

Earlier this year, Kohl reduced its 75% dividend to keep money and this week Bloomberg reported that Kohl asked for more time to pay for certain sellers, so this is an open question about how Kohl can spend on its turnaround. In addition, some of the movements that Bender has boasted to make stores more attractive using models to present clothes are really only basic retail, even Walmart, which has largely attracted its clothing offer – now uses models.

Although there were reasons for optimism in the Kohl report on Wednesday – comparable sales were unchanged in July – the Kohl saga remains a show story. As CEO, Bender has struck many of the good grades that investors and employees want to hear: more clarity in the measurements and the management that the company takes, something that its battered workforce surely wants after years of business disorders and disabiation.

“We know that our route to the long -term success of this business is to resume growth,” said Bender when calling profits. “Everything you heard about us is certainly aimed at this intention.”