Online sales for Kohl's increase 14% year over year in fiscal Q1. Activewear sales grow fast and contribute 23% of the retail chain's total sales.

Apparel retail chain Kohl’s Corp.’s online sales increased 14% year over year in its fiscal Q1 ended May 1, and accounted for 30% of its first-quarter sales. This means ecommerce generated approximately $1.17 billion in sales for the quarter.

The retailer’s shopping app contributed a third of its digital sales, which Kohl’s attributes to its app users growing 21% year over year in Q1, and improved app conversion rates.

Total revenue increased 60.1% to $3.89 billion in Q1 2021, up from $2.43 billion in Q1 2020, but a 4.9% decrease from Q1 2019, when total sales reached $4.09 billion. The retail chain reported a net income of $14.0 million, compared with a $541 million loss in Q1 2020. Kohl’s expects its online sales will become a bigger portion of its overall sales, and that the cost of shipping will “be a headwind.”

Because of the pandemic, Kohl’s and other department stores struggled last year. Many physical store locations were closed for weeks or months because of the coronavirus. Plus, once stores reopened, shoppers still avoided indoor spaces, like large indoor department stores or malls. One advantage for Kohl’s, however, is that 95% of its stores are not connected to a mall.

“As the country more fully reopens, we expect our convenient off-mall presence to continue to be a competitive advantage,” CEO Michelle Gass told investors, according to a SeekingAlpha transcript.

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Because of the virus, Kohl’s closed its fitting rooms at its stores, and Gass reported its fitting rooms recently reopened this quarter.

Like many retail chains, Kohl’s has improved connecting its physical stores and website, such as with buy online pickup in store. In Q1 2021, Kohl’s reports stores fulfilled nearly 40% of its online sales. In markets with stores, the retailer’s digital sales are 10% higher than in markets without stores, Kohl’s reports.

Activewear is a key part of its strategy, and the goal is to grow activewear to 30% of its total sales, Gass said. In Q1 2021, activewear generated 23% of its total sales, and sales in the category doubled year over year in Q1 and increased “at a mid-teens percentage rate” compared with Q1 2019.

“Last October, we debuted a new strategy with an even more significant pivot towards the active and casual lifestyle. And as we sit here today, that strategy has never been more relevant,” Gass said.

In addition to the Nike, Under Armour and Adidas brands it sells, Kohl’s also has its own private-label athleisure brand, FLX. Kohl’s plans to broaden the assortment of this brand and sell it in more stores.

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Another way Kohl’s is expanding its assortment is with its recent partnership with cosmetics brand Sephora. Last year, the companies announced Sephora will open locations inside Kohl’s stores. Construction, staffing and training for each store takes about six weeks, and it plans to have 200 of the Sephora stores open by the fall. Plus, Kohl’s will start selling 125 of Sephora’s beauty brand online on Aug. 1.

“This partnership will transform Kohl’s into a leading beauty destination and is expected to drive significant incremental sales and new customer acquisition,” Gass said. Kohl’s is No. 18 in the 2021 Digital Commerce 360 Top 1000.

Percentage changes may not align exactly with dollar figures due to rounding.

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