Online sales were down year over year, but opening more stores will make fulfillment less expensive, according to CFO Jill Timms.

Kohl’s Corp. remains focused on digital sales, the retailer said in a fourth quarter earnings call.

The chain reported earnings for the quarter ended Jan. 28, 2023, with overall sales down 7.2% year over year. Digital sales were also down, but the company has plans to increase them going forward.

Kohl’s ranks No. 21 in the Top 1000, Digital Commerce 360’s database of North American e-retailers by web sales.

Kohl’s digital sales were down

Online purchases made up 37% of total sales for the quarter, chief financial officer Jill Timm told investors in a March 1 call. That represents a 12% decline year over year, compared to just a 3% decline in store sales. 

Despite the decline, Kohl’s remains “highly committed to our digital business,” CEO Tom Kingsbury said in the call. Kingsbury pointed to the Kohl’s Marketplace, which hosts products from third-party sellers, and Kohl’s Media Network, which captures advertising revenue, as sites of potential growth. 


Omnichannel comes with challenges

Omnichannel purchases remain a significant source of revenue for Kohl’s, though it doesn’t break out specific data. The retailer paused its curbside pickup service in August 2022, and discontinued it fully in December. Shoppers were directed to use a self-pickup option for online orders instead.

Omnichannel sales always put “incremental pressure” on the business due to the cost of shipping, Timms said. Shipping costs are down compared to last year, but will always be a headwind in the face of digital growth, she said.

New fulfillment centers, of which there are now six dedicated to ecommerce, are able to fulfill orders more efficiently, per Timms. Physical locations “continue to play a key role in our digital delivery,” Timms said, as customers take advantage of buy online, pick up in stores. More stores will mitigate some of the shipping costs and make omnichannel fulfillment more cost-effective.

For the quarter ended Jan 28, Kohl’s reported:

  • Total revenue reached $6 billion, a 7.4% decrease from revenue of $6.5 billion in Q4 2021.
  • Net sales were down 7.2% year over year to $5.8 billion.
  • Digital sales accounted for 37% of net sales, down from 39% in fiscal 2021.
  • In-store sales were down 3% year over year and continue to make up the majority of total sales.
  • Net loss was $273 million, down from a net income of $299 million in 2021.

For the year ended Jan 28, Kohl’s reported:

  • Total revenue was $18.1 billion, a decrease of 6.9% from revenue of $19.4 billion in 2021.
  • Net sales were down 7.1% year over year to $17.2 billion.
  • Net loss was $19 million, down from a net income of $938 million in 2021.

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