It isn't doing Wal-Mart numbers, but, compared to competitors such as Macy's, which had comps down 9.5 percent in the latest quarter, its 2.3 percent comparable store sales decline, doesn't look bad in the current economy, especially paired with earnings per share of 75 cents, slightly below last year's for the period but a penny ahead of a Thomson Reuter's analyst estimate and two cents ahead of others. Success is spotty, in terms of merchandise categories that are driving Kohl's, but it's there. In a conference call, as transcribed by SeekingAlpha, CEO Kevin Mansell said:
Accessories reported the strongest performance for the company, led by sterling silver and fashion jewelry, as well as handbags. In home, small electrics, bedding, and food prep performed best. Footwear was led by children's footwear and athletic shoes. Men's was led by active, basics and casual sportswear. Children's was driven by infants and toddlers and boy's, and in women's, intimate and updated sportswear were the strongest categories.In the accessories area, consumers trading down from department stores are likely driving trends. Mansell noted that consumers who might once have spent big bucks on fashionable handbags are discovering lower cost styles. In an era where frugal rather than conspicuous is likely to proceed spending, Kohl's is in a good place to entice shoppers who remain fashionable. Consumers minutely trained in the minutia of style by a proliferation of dedicated magazines, cable television programs and websites that has occurred over the past 20 years aren't going to be completely deprogrammed by the recession.
Yet Kohl's put itself on the spot to snatch that business as it performs a post-tumble rebound. Said Mansell:
On the handbag front, beyond the overall trend, clearly there's been a pretty seismic shift in the way consumers are looking at handbags, and they recognize they can get an incredible amount of style and quality for a much better value than they might have been willing to spend a year ago. We are pretty well positioned in that regard. Secondly, we've made a lot of improvements in our merchandise content so I think we are really happy with the way our content looks today. All of our new innovation stores have essentially a new, completely new customer experience in the handbag world, and it is far superior to what we've had before. I think that's also feeding the growth.On the home front, just as it has in fashion, Kohl's has staked itself to draw in consumers looking for kitchen appliances and cookware as they do more home entertaining and less restaurant dining. Mansell pointed out:
There's been the elimination of a major competitor in the home market with Linens 'N Things gone, and I think to some extent probably everybody is benefit. It looks to me like maybe we are benefiting a little more. It's an area of focus for us in inventory management, as I mentioned on the call, beyond the cycle time initiatives in fashion, we've made a real commitment to basics. Home is a really basic category, and that is a category we are supporting with inventory, and I think we are getting our rewards for that.Interestingly, after a summer when much of the country was caught in a late-season cold spell, categories such as women's sportswear and men's activewear did well. Although some are blaming poor July sales results as released by the United States Department of Commerce on the recession's stubborn hold, if you pick out dropping gas prices and the effect of El Nino on much of the country, things don't look so bad. The July weather was actually on the hot side on the West Coast versus the Big Chill on the East Coast, which may explain some of Kohl's apparel results and support the premise that early summer sales were at least partially weather driven. Said Mansell:
By region, the Southwest was the strongest region with a high single digit comp store increase and the Southeast remained the most difficult. The remainder of the regions had mid-single-digit comp store decreases.