Kohl's said Tuesday its revenue fell 23% during the fiscal second quarter, which wasn't as bad as analysts feared as the coronavirus pandemic forced stores to close across the U.S. and many shoppers stayed home.
Instead, dollars shifted online, and Kohl's digital sales soared 58% compared with a year earlier. Shoppers stocked up on workout gear, pajamas, toys and cozy clothing. It said its online business made up 41% of total sales during the quarter, compared with 20% one year earlier.
Still, the retailer offered a grim outlook ahead of the all-important holiday season, on the same morning big-box retailers Walmart and Home Depot reported results that crushed Wall Street expectations.
"As we look ahead, we are planning for the crisis to continue to impact our business in the near-term," Chief Executive Michelle Gass said in a statement.
During a conference call, she said the company is planning "conservatively" for the remainder of 2020. Management added the back-to-school season at Kohl's has started "soft," with many parents still unclear about how and when their children will be returning to classrooms again.
Kohl's shares sank more than 13%, after jumping by more than 4% in premarket trading.
Here's how the retailer did during its fiscal second quarter ended Aug. 1 compared with what analysts were expecting, based on Refinitv data:
Kohl's net income fell 80% to $47 million, or 30 cents per share, from $241 million, or $1.51 a share, a year earlier.
Excluding one-time charges, the retailer lost 25 cents a share, which was better than the loss of 83 cents loss forecast by analysts.
Net sales fell to $3.21 billion from $4.17 billion. That was better than the $3.09 billion expected by analysts.
Kohl's did not report same-store sales, which track revenue at stores open for at least 12 months, due to the pandemic.
It said its gross profit margin shrank to 33.1% from 38.8% a year earlier, due to increased shipping costs for online orders and heightened promotions.
Kohl's, which like other retailers was forced during the quarter to temporarily shut stores to try to help curb the spread of Covid-19, said it has since reopened all locations "with new safety and operating procedures, accelerated digital growth, and showed great discipline in managing inventory and expenses meaningfully lower."
It said it ended the second quarter with $2.4 billion in cash on hand, and $500 million of availability on its credit revolver.
"Fortunately, good financial management has provided Kohl's with strong liquidity," GlobalData Retail Managing Director Neil Saunders said.
"We are modestly more optimistic about Kohl's," he said. "The location of its shops is more favorable and, already, foot traffic to uncovered shopping centers has come back faster than it has to traditional malls."
Looking ahead, the retailer said it is expecting shoppers to begin buying for the holidays earlier this year due to the pandemic and the uncertainty it brings with it.
"We will meet their needs accordingly," the company said.
Kohl's shares have fallen nearly 54% this year as of Monday's market close. The company has a market cap of $3.7 billion.