Kohl's Reports 7.2% Decline in Net Sales for Fiscal Year Ending February 1, 2025

Kohl's Corporation reported a decline in financial performance for the fiscal year ending February 1, 2025, with net sales decreasing by 7.2% to $15.4 billion, compared to $16.6 billion in the previous year. The decrease was attributed to a 3% drop in average transaction value and a 4% decline in transaction volume. Comparable sales also fell by 6.5%, reflecting a challenging retail environment. The company's gross margin improved slightly to 37.2%, up 50 basis points from the prior year, primarily due to lower freight costs and effective inventory management. However, operating income dropped to $433 million from $717 million, and net income fell to $109 million, or $0.98 per diluted share, down from $317 million, or $2.85 per diluted share, in the previous year.

In terms of strategic developments, Kohl's closed 27 underperforming stores during the fiscal year, with three already shut down and the remaining expected to close in the first quarter of 2025. The company also ceased operations at its San Bernardino e-fulfillment center in January 2025. Despite these closures, Kohl's expanded its Sephora presence, with over 1,000 locations now featuring Sephora shops, contributing to an 8.8% increase in accessory sales, which includes a 25% rise in Sephora sales exceeding $1.8 billion.

Operationally, Kohl's employed an average of approximately 87,000 associates during 2024, with a mix of 33,000 full-time and 54,000 part-time employees. The company emphasized its commitment to creating an inclusive workplace culture and providing competitive compensation and benefits. Digital sales represented 28% of total net sales, although they decreased by 9% compared to the previous year. The company continues to face challenges in maintaining customer engagement and adapting to shifting consumer preferences, particularly in the competitive retail landscape.

Looking ahead, Kohl's anticipates further declines in net sales for fiscal year 2025, projecting a decrease of 5% to 7%. The company expects comparable sales to decline by 4% to 6% and operating margins to range between 2.2% and 2.6%. Kohl's plans to invest between $400 million and $425 million in capital expenditures, focusing on enhancing its omnichannel capabilities and completing the rollout of Sephora shops. The Board of Directors declared a quarterly cash dividend of $0.125 per share, payable on April 2, 2025, reflecting the company's ongoing commitment to returning value to shareholders despite the current financial challenges.