Kohl's (KSS) 24 May 232023 Q1 Earnings call transcript

Hello and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kohl's Corporation First Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Instructions] [Operator

to Investor over Relations. like Senior Mark the President, Vice Please turn now to conference Rupe, I'd go ahead.

statements the those such risks are Kohl's actual Certain financial projected risks and are in you. made to could call, certain this and Thank cause which including subject results, to and Such statements. differ Company's forward-looking forward-looking initiatives results statements. uncertainties, future Such Item those include, as Kohl's incorporated statements XA SEC, on projected are expressly time materially herein are in limited Kohl's are uncertainties the on may and filings of in other from in to, recent XX-K that by report but supplemented annual to reference. most time which all with described not from Form be

to and Forward-looking to the no obligation made, them. date undertakes initially update Kohl's statements relate

In non-GAAP to is X-K can presentation the make Investor our exhibit website. addition, financial financial Relations available Company's we found to this measures. filed in this during measures may that SEC and non-GAAP be investor with the recorded. note will the an be of reference call on call, as filed Please Reconciliation Form

of not replays will be updated. However, call this

listening possible undertakes is to of So if update information obligation it no is such replay you're to call, that longer this no current, a Kohl's discussed the and information.

to our With me over this Officer. Financial Chief Timm, will CEO; Tom I turn Kingsbury, Jill morning call Tom. are and now the our

and Mark, thank for us you, Thank all morning. joining this you

sales and we earnings call over priorities actions long significant to business opportunity last the As the to had we underway performance. a shared specifically, More improve on in drive we March, have earnings and we our term. Kohl's shared

a in the am first right that quarter report direction. I first to step was the pleased

in progress first quarter operate our each despite of against priorities made expectations, line overall we continuing for our challenging to results a macroeconomic XXXX key Our and backdrop. with in were

the on processes our refining focus elevate continuing and to our customer. our strategy, enhance are merchandising We

While efforts the the I full impact and a against for our with it how Kohl's focus will entire is with of realized, driving be clear happy determination. priorities strong to team take time am these

Our with to quarter as move first we we performance. incremental this up accomplish set and to is ourselves our objective through show improvement XXXX,

As balance our unchanged from it outlook for to it the year, relates prior of the our is view.

full affirming are We our year guidance.

I with our and year. as said, our were the more line will quarter our with entering consistent As Jill second discuss first quarter our on view plans in results detail, the in is expectation,

our goals. have move Our we work ability confident in achieve longer-term our of do, to we more forward. And work the while I XXXX remain to as to will business us position our change trajectory in

was and to in X.X%, was of was our March quarter. the X.X%. first line. Turning highlights below comparable strongest Net the April performance. decreased sales were February the but expectations, down sales

which productivity in stores quarter, focus single Our the business, growth. sales a is delivering gains key of digits ours, low achieved comparable positive

expectations, average driving higher XXX% our An units Sephora at transaction beauty our to of continued clearance increase increase than lower Kohl's actions. driven the year-over-year. store traffic a offset by and in more outperform ticket total sales per

mid-teens plan. shops with comparable exceed period, success growth apparel XXX achieved opened the in in the in the continue in and We in trends sales XXX positive was shops average in in to XXXX. And business growth continued healthier outperforming our opened our the beauty a XXXX outdoor. sales active the And Company

one highly long-term softness to category, a Conversely, in on we area opportunity. substantial and remains we that focused continue an the home see are

line, down top the the we're able drive inventory margin to in X% expansion, Beyond and managed quarter.

in each of we traction in and we against XXXX. and focused strengthening discipline I experience, the pleased with the enhancing simplifying value quarter, and first expenses and managing the these four on on balance seeing. update am initial made are priorities priorities an accelerating strategies, provide progress are our the inventory to like now are would They I the We overarching with sheet. customer

Let are initiatives. customer the me online in product starting and our and stores merchandising with share enhancing through first experience how details, we some

long-term strategic a example It with experience Our delivering how great partnership are prestige Sephora the of beauty a customer experience. is is Kohl's. at we enhancing

the at what assortment for. That looking delivering long our and we growth bases. capitalizing on customers a is achieve customer meets Kohl's by significant collective great our is set each to grow opportunity Sephora they brands company's in strengths the out a needs leveraging on beauty partnership are with of The of to products over the industry term.

our a As share. to up quarter, ago, and first the in I XXX% continue highlighted gain market were moment total sales beauty we

new in and average more shopping bringing our frequency the than are twice are at We customers, customer. they of

Our support outcomes this yielding the investments are intended. to partnership we

is process expanding more of We reaching testament quite accomplishment, a is by impressive Kohl's of footprint, well Sephora than teams stores are Sephora the in to at work the This and the end of further an how the and Kohl's our XXXX. XXX together.

Sephora XXXX, remaining will QX. which quarter in will In XX open the square open of early X,XXX Jill as will discuss. This opening investments concentrated in QX, to XXX, will second shops, we lead in foot schedule XXX elevated the with

we shop. a addition, Sephora have XXX developed In foot square

later our they shops rolled by be another these end the exceeding opened out to remainder few driven expectations. We and of open reaching fall, beauty smaller chain of sales months have will a XX XXXX. and the XX this of the We'll ago, by XXXX, solid five

capital expense noting are expense both in of and our guidance. worth year, which relative some QX and from an last is to that embedded the shops Sephora perspective, capital in smaller incremental add It will spend

the Sephora To stores, more end including X,XXX presence of in than of of square XXX summarize, XX in foot XXX our foot the the than with will we shops. year our more shops XXX square

mean, I the underway touch and beauty, and efforts we have product in beyond on progress Moving now our merchandising.

categories. our capitalizing existing with offering balance on As focused also while optimizing underpenetrated it to opportunities product our are in assortment, relates greater we on

is category. our home of biggest the One opportunities

disappointed clearance did were performance, QX home therefore, benefit with year with leaner we and our inventories activity. enter the from had less While our

core on in decor, highly results enter. initiatives how by the near well improving customers of impulse focused categories life are growing However, underrepresented as the the home business as come we store as these merchandise our pet, see months coming rebuilding stores to our showcased We'll decor we and gifting and gifting, outdoor. such as with inspire and they to front

work this underway. of Some already is

the you Our products continued Memorial and our visit Day. across around gifting repositioning the recently, the focused July deemed more of store season When holiday fourth Easter positive see Day, you Americana and successful, proved the the Mother's trend to this and Day of during highly gifting front will holidays. stores of now, Valentine's

of stores expanding We seasonal, In Pet, we successful in last are opportunity pet a our space of outdoor wall within art, test home. include offerings and are furniture, more also Areas greater and patio allocating camping and following selection home fall. outdoor tabletop. decor, gear a

room our in this for make with To support impulse one are selection stores a additional XXX to area productive transition. adding of most we space, of consolidating stores items. greater checkout in kiosks self-checkout to be selling We'll

standards to We more are our model. efficient ability with service this confident maintain of our high customer in

Turning to our offerings. apparel

polished and reflect to of and and customers' We our suiting in women's selection clothing optimizing in dress a assortments interests. dress more includes casual are men's. greater offering This shirts

I stronger the polished building a as In presentation in are outperformed women's, areas focus this business. and dresses casual, QX, much said. During we

outperformed concert, building core provide significantly assurance. essentials Dresses in depth quarter. and the during to In are trip everyday we

We several merchandise. including are investing are We a our committed active remain lead elevated areas, seeing better results and good actions tall. will in while In active, experience men's, with optimistic across an and in-store that shirts suiting we outdoor our to presence dress the future enhanced business and to performance. and big outdoor,

active dress to with driven the and men's. and by and also continue broader suiting shirt that in a Children's outperform growth average will outperformed dress positive clothing similar believe QX, the business women's We assortment. Company to in

We offerings boys areas with selection in clothing. stresses dress are as diversifying such and our girl greater

items, me stores. our starting Let additional some highlight with now

stores pleased we improved early to two the build with important are success. remain our incredibly in our their future vital performance business, momentum. increasing quarters I to can As we that our our on am productivity is confident discussed, and and past our

already stores creating signage graphics assortments and are adjustments the we and drive empowering making their to we we sales actions In have modern in our to merchandising capitalize our are customer discussed, experience In our markets. experience opportunities improve on so, to addition are and simplifying how the local for customers. a I to doing more

opportunities the over capitalizing also term. long committed We're new on store to

one our XXXX real a in stores we part relocation. QX, of which of estate new opened two As was plans,

new During of in will stores seven the five total of we XXXX. open for the additional year, balance a

experienced softer We Turning to our demand digital QX. in business.

quarter. as promotions Digital shift we was value to to penetration towards back in continue XX% we customers and simplify stores, online-only reduced the our strategies. work Our

down versus last still up pre-pandemic this year, to While is meaningfully levels.

initiatives experience, as refining enhancing product assortment value as including ahead, strategies and our simplify well Looking our to the Marketplace Network. various digital we Kohl's underway, Kohl's further site curating have Media and continuing our

competitiveness progress discuss of improve and our On and our the greater our we which against strategies driving simplifying conversion. making value last are Kohl's promotional engagement the simplifying an Now priority, to let highlighted by call, pricing opportunity accelerating our customer goal me second and strategies. is we with

on clearance to offers During replace and and offers the began slower-selling general clear we a first regular goods promotion basis. online-only more targeted quarter, with to events

forward at moving appropriate the will this pace. We approach continue

we with test simplified items our which will private our Additionally, pricing aligned key within apparel brands, and value efforts. are home

of this marketing the to our which a see will Customers begin small season, to back-to-school moved approach integrate assortment during we into will messaging. our percentage

in initiative this grow steps and successful, approaching measure this assessment following a and years. We it determine will are If and we subsequent scale our will with great next fall. flexibility,

our as deliver more leverage to loyalty our value program mechanism continue to even to customers. will we Lastly, industry-leading a

rollout time, card our expect the second our card that select co-brand from the of dual of quarter. more in offering Capital strong flexibility reach to private customers. and Over credit benefit begin a label younger will offers to customers existing We One with card our to co-brand we

to expenses inventory with making our we will is I the discipline. transition which are progress priority, against now managing third and

managed During our QX, control processes and to line digits with inventory goal percent. down last planning inventory X% is we This in our down inventory year. mid-single of enhanced

to inventory turnover. clear sooner will quarter, selling which regular to receipts clearance our and the commenced during also actions liquidity slower We create drive greater chase items

through be and enhanced we'll that productivity optimistic turnover. remain to our to continue inventory overall I able sales inventory processes, control increase ahead, our Looking

room and well perspective positioned feel headwinds. inventory of about the is with plenty liquidity macroeconomic from a good QX a We are persistent our to given chase. This levels positive

to a SG&A percent our expense of focus me declined on In leveraged expense to and X% last let management. Now year QX, turn as our revenue.

Company. efficiency on drive all of are areas to across We capitalizing opportunities proactively the

timing the and and However, as of Jill changed. for our pattern spending To our will clear, discussed. the the discuss year in XXXX Sephora concentration just detail, given I has be SG&A outlook be more investments not will expense in store-related though, SG&A unique

And strengthening lastly, sheet. our our is priority balance fourth

sheet maturities. Our This, with to QX, a as quarter in of a focus our managing historical working on of we its utilizing million retired bond planned. strength remains long-term led X.Xx $XXX the returning objective balance leverage In capital to the revolver level. to along funding with

discuss which our yield dividend, the priorities, capital price. will other Jill allocation including current healthy represents to commitment at share the a our

was So effort. not the It performance journey extremely Kohl's entire executing pleased was our and focused long but in quarter against am the to drive term. step team was the I that a a sales over to first in team summarize, our first priorities. great surprised earnings

As continue the our we with to prudence. outlook the look balance approach we year, to of

quarter our to to up ourselves actions objective improvement as priorities accomplish the this move against our show first We performance. year. and with incremental remains through it our set However, we

thank loyal our closing, In to associates our day. customers to for and our their want business every I contributions serving for

I outlook. call over quarter to XXXX results will first discuss and Jill to now our our turn the Jill?

good Tom, XXXX. quarter and review everyone. discuss first our our morning, will then Thank for guidance I and you, results

expectations As the our initial we in Tom and first quarter. priorities against made line strategic during shared, our progress with delivered results

full year operate confident our a and to outlook. have backdrop, macroeconomic affirmed in continue financial we our strategies remain we challenging While in

quarter. single-digit private driven strong XX.X% product percent in sales as well were X.X%. our to From at outperformed were low year. actions. quarter. Sephora down the Net sales as last clearance national up to Turning brands a were Digital first perspective, brands the Store down Kohl's by sales growth

Simply Hurley brands Columbia, national quarter while fine the to Apartment Nike, Accessories and in-store top-performing shops. was was last room jewelry was in were growth year. removing of counter Beauty top-performing by up for and lower Strong jewelry, Our line by partially displacement sales sales with best-performing Bauer in our brands to Flex offset business, Izod, the Eddie the private Sephora impacted associated which Hager, largely Wang. of again make include XX% X, VeraVera our

and our other Other to declined to As Performance underperformed. Company it in normalizing while children's business the quarter. revenue, expected. average, which is outperformed loss some and continues credit men's relates business primarily of the categories, be first footwear our women's credit by of were pressured XX% rates, home, apparel our which

While will improve year. to progressively of other during balance down revenue expected the year-on-year, is it remain the

in turn higher strategies Now the product of gross our income partially up driven points let rest lower to of the cost and QX was offset from improvement shrink. digital-related expense, shipping, by statement. last basis inflation XX%, The me XX value a decline year. margin and freight cost was simplifying by

expense Sephora fewer last continued wage marketing, disciplined were openings related SG&A decline across $X.X refreshes corporate year offset X.X% driven compared as headwinds. to and store by The as expenses to down management and well which as billion. was

Depreciation technology share last was Interest due quarter $XX million was $XX compared $X.XX increased of million expense $XX amendments million year Sephora-related income lease higher borrowings. per revolver $XX due for earnings to spend. the and lower million $X.XX was last last diluted and capital year to was Net $XXX as than million of expense year. reduced than to

cash compared Turning with quarter cash balance to down quarter sheet $XXX the inventory We X% last cash flow. equivalents. million to and of the ended And end at and year. was

shared, on entering about level we our Tom feel turnover. and inventory remain good focused QX, driving As

quarter. first for quarter expenditures the $XXX flow cash million. cash of the use of in were $XX Capital Operating million a was

of We are million approximately expenditures $XXX in capital XXXX. planning for to $XXX million still

leverage of in cash it business our goal longer-term XXXX. top this X.Xx. our Strengthening Now that our update on an and is one at let our we allocation our position, me It capital and of provide manage capital target structure rebuild a sheet to priorities important priorities. balance remains is

both million first quarter, In capital working utilized the our we and the planned, as $XXX to retirement. revolver fund bond

of to plan expected throughout balance continue December borrowings XXXX. revolver no on $XXX of down million retiring working inclusive year year-end, our We with in the bonds of at

our current to it we capital yield As returning continue relates prioritize to for shareholders. which a healthy will dividend, represents shareholders, to our

$X.XX During the first dividends or per we quarter, shareholders. share in paid $XX million to

share In a XX. payable on addition, XX, declared shareholders cash May on June the $X.XX as to previously disclosed quarterly Board of dividend per

provide Now for let on outlook details me our XXXX.

are against we today, making our we priorities. pleased As progress you've heard with the are

in Our challenging with line first results were expectations our operate continuing despite to quarter in environment. a

we guidance. this, Given are affirming financial our full year

X% For the and we currently any and sales charges. to range XXXX to worth versus to includes of margin year, week the be decrease $X.XX to point XXrd in approximately one excluding EPS Operating percentage X% growth. nonrecurring full the be X% approximately is $X.XX expect net of which to

the a highlight how about to of thinking second are want I Lastly, couple items about we quarter.

we last in to the range, gross margin year margin continue first margin regular to year gross as on down a more the below full our basis quarter XX% slightly QX clearing our are rate. and with XX.X% We expect to goods

our expect full deleverage slightly. expense to year continue to We SG&A

clear pattern However, QX, year. around we want in to our given this spending be the comments unique

for We to expense SG&A the are to year-over-year up quarter. X% be planning in second X%

view includes a Tom Sephora This entering and investments of level investments the discussed. year our the timing to QX this with concentrated plans consistent year. related of is the openings store-related

questions your at take to happy are I and Tom that, With this time.

first Drbul Our question with go line from Guggenheim come Bob will the Instructions] Please [Operator Partners. ahead. of

I Two actually, Nice you, Tom, quarter. for questions if could.

you, seeing, you seen the laid in is what for have the sustainability out, just either what what also one of to question, terms far? you're then second margin The that you confidence speak of at just strategy gross you've it's so can were doing? you talk have that on probably the you're first might when look the you but be to And The just can margins up. you

You're margin year. talking the operating the for about X%

If you elaborate on more can just maybe be segment? helpful. would That bit a that

answer Jill strategies confident We're I'll terms place. and one, the number question in answer I'll we of have question Well, number two. have in the very

of As in has business other rebound first well. to The the the The little kids active relative very, men's a and bit as quarter been had mentioned, the very business apparel a strong been I Sephora business has areas good. overall.

and we're lot for of get as now some home I've huge deliveries We business mentioned in. business, grow really should But multiple a businesses. opportunity to continue seeing due a The in There's us. starting times, is there's that of to to traction positive seeing quarter. the opportunity second start weren't And a that. lot the we to categories

get The but somewhat area in we polish product opportunities dresses QX, should And is home to in in for to we that see So we it overall. casual. we that, was business, think women's did if better do -- continue more like that business. traction and disappointing multiple just deliver

So feel yes, really we good.

pleased We while kind terms new of the very hard that entertain stores. all our their a they're And get really ability it the general team done. performance in and good with in had are very of performance in about really stores. and It's been the to to working feel I in since strategies, pivot we've

And What the confident was feel second very question margin our say would we in margin is outlook. I sustainability.

year to that ago productive more but to value really targeted well much a make of of de-layering XX% and in we more guide opportunity the will couple offers customer, we framework the you Day. continue is a which the introduced fact, at through lot way, for pricing to have to years for we to a And drive continue. offers us. them targeting benefits have it do Investor around our long-term that within put The actions simplifying In the XX.X% our

going sell-throughs a better clearance at on have prices. is better much manner Taking more definitely to timely

change pressure this a business in doing we thing customer a little perspective. bit, between a but in also that both but do of quarters margin the we'll sales think QX perspective, as from right bit do little year, obviously, started that's the a So of to for have we from terms a

we as inflation through year, commodity abating, move back-to-school then the our receipts. especially we'll a to see of And the lot start with

number is progresses. think coming to down. the I continue So cost see freight, increase we'll that which to will continue year as And from benefit

all we see it, going we're We SG&A, with against some moderate least X%. outlook. that shrink slightly feel like our will we even will margin being X% down With definitely to we said, to to that actions continue to deleverage put but that about at continue. to expect we can And but feel down great headwinds,

shows just cost that within it back, be particularly increases. been around So, the store finding the more marketing, of some a to have help efforts around to lot efficient self-checkout with our offset of wage ways us driving paying down

have a the we although outlined. to due QX, had drivers So sales really Tom that pop in

can this hitting we framework into So feel with building that that and store. and for we that as on in feel year have the fund the years. then out do -- We move we outcome outlined the good confident X% forward

next ahead. from Carbone line Gabby Deutsche the Please of comes with Bank. question Your go

Tom, view you do year? the you do overall think since of behavior the the how And consumer? So has picture, beginning just maybe bigger changed spending consumer

customers. can issues But continue think any feel is Well, to that if we value squeezed said, we business really middle can and obviously, we the can issues, consistently et cetera. navigate based the on, being with deliver to I overall strong macroeconomic we values the we around capture if good deliver income that customer

to honest really with be hasn't So, changed you. it

we're more that's think been the doing. going have customer continue And to And give to -- going forward, it's it's what to similar we're I value. throughout.

I then And just a follow-up. quick Great. have

into the of you athletic? apparel was brands drove own And Was what your can there. within then, the both are and positive if how and results performing footwear? wondering, performance Just dig it athletic

perspective, did I see our an apparel. comps So, active think in from we positive

been improvement So our Footwear three some but we business, there, are apparel. as to across see has the seen know we top definitely excited relative particularly you that has something have in the that brand vendors. been lagging

And was think But to price across perform athleisure still which brands, -- which the gear, then point, has as store. is tech instances opening and for well. we the moderating brands top-performing as was of in quarter called we is continued Flex where some our one I good do brand our see us quarter last off an back push But growth saw year. big third quarter this and in to fourth top fallen getting three of they really had our

of from with question ahead. Your comes Please Mark next Baird. the Altschwager go line

more then color the can comp settles hoping X% on any to you Jill, for in is driving color then What term? And a the down also And you a medium or to shift? bit had on penetration your e-commerce. think QX provide X% Where could expectations here annual more follow-up. guide? trends provide channel relative the quarter-to-date digital you do sales I

trend, answer part. May me slightly than Let is less the we first current anticipated. The

we feel the up we can throughout make However, quarter. it

Looking June. last of back year, toughest one our was to months

And ground quarters, that So, good lost we the we continue our mentioned and we the we feel overall. that things of lot strategies evolve. can earlier, place. a the we that as feel But we have to go make business through great about that we in up I in think a I lot May slightly as will of

digital, we've lot Tom outlined of we XXX the are positive June focused excited July And more comp. I Sephora a And in And a on with and stores Tom's year even the driving the storage to comments think of quarter, this the the business, then in I frame. store. as initiatives indicated, on think first, opening running about have we're time terms really

will we momentum the we definitely business through throughout that digital digital year. we perspective, the expect have definitely a improve So, feel like From some our stores.

the delayering, we As online-only talking some rid and of offers. of to offers some our were simplify were removing about those of getting the equation

at the didn't customer, we to make was prevented us, productive And looking when for really cut. were the those what what so value

maybe more impact from that they little bit had a perspective. think I So, outsized

and we having one that's on working though, forward, is that move we clarity. pricing incredibly We a digital, transparency. know we're just pricing As lot on, important that have of through things

digital the experience, pricing on that the We're stores. as that's driving lot customer help so we replicate to in focused we enhance doing that doing have, to the with online should transparency, which also in actions really well. a that to a but spoke site lot We're space. So experience

better more more to So, have going relevance, you're search inspiration, recommendations.

consumer lot looking that things of So there a for. can is the we so what drive

also assortment then much those product can digital our that so for really which and media curating refining network, marketplace And customers needs. better also, the we're in space we we're helps deliver around well. then strategies as that our And just

we So feel confident with the strategy have. that we

to the expect improvement see we So progressive throughout year.

Yes, are I digital everyone -- year. a to we as on just Jill want we comment that. go also want understand going I of Jill actions the to business. to we forward. see as taking improvement the as And through committed said, said, we that lot And we're

follow-up. quick a then And

some confidence maybe some are gaining margin? being gross maybe working? but You this, the here, where of but And initially initiatives. that you to what's was sounds through hoping guess, flowing simplification could of in the how I you It touched unpack lean very And sooner some I that on value you is than like you're could measured thought?

digital key that's is the we're obviously, strategies doing events overall. in of What events last value right about our eliminating simplifying year. mentioned some one the Jill that of just Well, our now layered had we in of we're terms layered message.

we still has terms Kohl's the very of in to are in confident customer. the model delivering So that value very,

to layered need rid as of we that before. events, mentioned some get the I just of We think

think where promotions. general we offerings the to get to relative targeted trying general it are those give also of rid kind through a of to We everybody. events public business of needs to driving be more terms discount in We

key mentioned going as during in price carefully. going to in very, we're value it We're doing going to accelerate the the And We're to we we're not off-price in, last at be where model, point that. back-to-school to start the bringing look the price It's And very season selling. that to value. everyday but be call, low going at it's to items. going not some a we is going to the at convert brought goods,

we're don't We're without accelerate don't is move because But mistakes things We're to really forward. testing not, make business. I doing want and going impact just overall, of we'll we anything terms going And looking good, it to it. at measure we any look if we'll to for any big promotional If if we're calendar. the that something can else. to in then obviously the know eliminate

of JPMorgan. question comes Please from with next the Boss ahead. Your line Matthew go

Congrats on the progress. early

So Tom, speak key could manage date to across the receipts you on on place in the the elaborate and inventory sustainably progress, and to assortment? that put newness drive learnings you've initiatives to

ears. Okay. well, the Having reasons. Music -- key many to disciplined my the a many, having for is approach obviously to inventory

in of from of with happy down are to the terms the in than being second January made -- we We end X%. progress we that of have the quarter. end now We right now, could better be

chase But again, we what money going is and the feel any chase. is point things key. to being do really to and to in buy to time, are, have going mid-single-digit around, moving positives we the that at are buy able And have execute open we're we're to. decreases to Things open to what

them be want of little been things the if inventory are be. things managing catch overall, higher is it's we're good terms in is that to putting trying we're see on team execute the eyeballs really to But really proactive lot a than just and a effort to a And process the -- on trying we of it processes lot overall. overall. emphasis getting to And we it's of a

to that -- in the driving how here? just rank store maybe on initiatives the from you're most improved on cited fleet inventory think productivity help then excited best traffic just time the the the that improved And you about about the and you over stores, could

Sure.

stores for So XXX -- first I stats around saw go which stores smaller a continue to the comping our solution the clearly expectations. those just Sephora. those you to there. are then is the impact see we And first outsized think Sephora in exceeding now first and stores, the test us to traffic-driving our And mid-teens in initiative have

traffic. seeing definitely we're think I So,

new customers. seeing We're

would definitely one. that So ranked be number

think the front decor of adding two to we and is of presence. and that to number really home out, I my we're a the moving selling the space have more store have registers that going

And lot. has It's done white a big a this Tom space.

So also really so that it's walking impulse a the big item for inspired can that opportunity. more basket. you're to have we get in find an It's an added to item of

I think that would So be two.

is store collections able that were Valentine's into really, add me recently, really just and those we able Day, and as their basket three and to shop and to the to Mother's holiday, And for gifting, and easily we that the the pull customers' that seeing Day, reaction proof-point saw the well. being most of to through front when

So, that in, around into we footsteps participating the think stores. been those bringing gets back changes me those I hadn't spaces in what really,

I stores. be with think the expansion about for QX us, stores for additional the especially XXX XX new those adding great small of in And into opportunities continue to Sephora. then QX,

And front. and to we're then bring home throughout we're our QX, core able all to registers of the the that out pulling fleet, and to

So, line. show of which I think of in in Tom confidence that front the I improvement in opportunities us, I a why lot think top is there's and progressive

little a as And Yes. on bit that to well. want I comment

right Kohl's when walk on was long the For the a long, a the side, side and for a would men's see time, or long on it time. left-hand into right- store, women's you same left-hand you or and

said. opportunity gives as base removing front, gifting more Jill an in one the of So us have the to register

something when different new, giftable, a -- seeing into walk something look. store, they very and it's the different, something they're So

a Kohl's customers excite every want they overall. We time store to come the into

very about we're So that. excited

sold Valentine's quarter our we in As very sold well. started moving I in the Day to and the well. they really Jill said, giftables it front, fourth of mean, terms

sold -- we But out Easter a lot front we mean store, also nicely. the older Kohl's stores. very I the graphics up put graphics. look. the more the branding yes, has well. in everything throughout much up we've worked We changed modern put more in of We removed

It's brighter. cleaner. It's

the all for in-store So customer. again, improving of it's the part experience our

of Your Telsey ahead. question Please next Dana Group. Telsey comes line go the with from Advisory

Very nice progress.

that? back, the promotions the messaging. wanted whether the re-imagine and Where how you're how upfront store you it's store As whether you you it's and whether going to about are in think in bring, adjusting the value how And to about are thinking it's forward? do looks and you then more And should lastly, just the margin. them the to execution levers look? adjustments for And packing, you there? on digital you see what how frame we expenses gross just the want one going back-to-school? time How And and how

I'll We've made do progress we've made to we're the going two. continue it progress, the question to number one, Jill quarter. and of second in the Actually, good to can in question transforming terms complete stores. number and

a presentation And you as into we're seasonality. the we'll back-to-school, that year. back-to-school items have of just far walk obviously based store, of on But rotate to probably to as highlighting the time as looks continue going

July upfront gift-giving Memorial highlight we can. we've execution and Americana it -- pleased have for way Day we that period every for said, But gotten I behind I'm the with Like far. X. the we've to tried And and the with so team's

penetration thumb of given of has Yes. think And the the of rule margins. always terms it you change of I the we've and impact in to digital, we when have kind

you our that of it QX benefited having So cost shipping less in data. margin saw of with definitely

we that will people down pandemic. is to We us improve, that's penetration from but going as We're outsized expect a we the migrate come see perspective. a more stores, to some going digital margin benefit had to nice which for think that post

lot down from that but and serve really appropriately. slight point focused much leverage on our of overall I a the comp. X.X% around be X%, leverage still of a terms still to customer more think is how company, X% expect deleverage this do We can down efficient efforts have In we year,

really at with as sure still into experience, store looking we that that to investing to we're back is that as want all customer the changes in help make And these we're also them an lens be make we well. to the that's associate there

that's where kind rightsizing, So, had. overall, up. of of kind as I because moving seeing would it should your as that's headwind framework works we're digital Typically, that But shipping. of back getting still you're the cost costs the a always now benefit be think to say, I of

line with Gordon the of comes question Haskett. go next Chuck Your Please from Grom ahead.

question on a one term. more have bit little near I the one term, longer

to embedded second on some we term, it of about comp On down should think within components expect you be Do X% margin that how the quarter you near SG&A? the to in the Jill, to the X% and provided the that's that here full first in earnings about four-year to from Just is year think fall range? to where triangulate quarter get stacks Or should number? out trying we holding the going to XQ.

Yes.

then I some where had we'll there's with make strongest Tom just in indicated, of but make terms feel expectations, for all the strategies saw We QX. up our outlined, think slightly April of lot expectations our and improvement in that what below throughout really us, able where May of was month, sales that the would as a came we which year. think we we are had we said our is we in were. front February expected we be to progressive

would the the a say part hey, on those be the with still latter in So, we in it's Sephora comp to of we're product, benefit especially lot of saying, that happening going QX the into I of build because and towards half have going more strategies. to lot influence. with then of just we're And of back of Tom's a terms moving year even that,

in We half the going a lot to and back have a the chief influences that year. of new of merchant, land

the so, And why that build in we from that's feel confident perspective.

to year take why of have expectations. also I'd say up I the guide and really the get our that way rest we let our that build and would perspective, QX to more strategies of So, back we but towards hold, build the in for end the be QX expect as bottom to confidence our that's from

Okay.

helpful. the how curious That's clearance for mean, reacting guess in stores, not just doing quarter, how used the Great. that very just seeing throughout customer this is more smart. the I Tom, customer responding. the it's and then when is clearly, to And strategy sounds reacting? I Okay. they're sophisticated, you're but I'm

as our doing times honest a with it already, really couple The customers of you. business drove our clearance, said January I It's we love be mean, very well. overall. to February business. drove It

there's than okay? that, timely So markdowns, better nothing

markdowns business when fall markdowns in to we the waiting would take are markdowns Taking would we we like the product, we want waiting. March, take I February and are the is September. and really the customers on turns. August in timely really was just basis, inventory It too late. them markdowns critical and as to a our And running spring improving hopefully, and I said, take mean, taking

approach question one the could, the Okay. see philosophy Matt's dollars. what what to more, the if changes I from inventory, a a the it's place the -- perspective an just the balance systems But follow-up do obviously, tools in overall needs from merchants, and else change And have or approach? a and you just can you the Or in earlier done? about and be in of sheet matter then on

you're so off-price more if deliver. But I learned in It's it's many in about, the we open spend, eyeballs to understanding for we're while to place. one have things a at chase. in buy to open that again, having processes sure making now. times, with on processes had We place not importance just the systemic. It's that. is we've of the going we're about just what said the all the having inventory And delivering of benefits there's It's to that more levels

Lejuez question next of the comes line ahead. go Your Citigroup. Please with from Paul

any but might obviously the as ended little if that volume with know the units? stores, that the And where your where second, in look way stores of to at markets some first you've Any I longer might have that you units, change in units just that the been about dollars, had now. year? you move change you you've a multi-store And finding you in an front? throughout fleet, of How on Tom, remain? you we to opportunity what the any then stores think the can quarter? number Inventory, you curious the -- guess I'm view that of are end transfer talk close versus is different about the plan

Sure.

So are inflation, the of that incremental more down year. that even will the And part from just particularly in just said, a have lot stores our we piece we units the that a the which given you latter do which come think and that actually with we do commodity of from talked an more unique small would context inventory lot of year, it. given the we benefit Sephora than first being perspective, about in half dollars cost this opened, units the just with in understand the

we abate suspect would in but as would down be we the So those half year back move much Units costs more, were the seeing as forward. that in I of start line more

don't stores have how any We terms in really approaching we're overall. changes of the

lot if And we any, closing very make profitable. a Our few, they are because anticipate stores, stores just don't of money.

that just seven can whether right right 'XX, level. So, But is we're right stores really one of now, we -- do as a have typical now, -- like in now, we're staying more, see staying we're going we're we to which is. we planning relo. And opening on or looking not at to but

comes the ahead. next question of Oliver TD Chen Please Cowen. from line with Your go

traffic opportunity. about you those then valid what an how and Historically, weather-sensitive, apparel. has in balancing driving That's going terms and customer women's that Company features as we of you're forward? at third, love there on your been somewhat thinking Tom margins would younger to merchandise difficult. if are been been back relative risk look factors take Kohl's, has and Also, and see the

changes data then, to to of seeing have? different making. term? lots order and in how Jill, we're And Cash all you what's in an some terms the there's hanging Kohl's them you're in versus second Could have really AI impact, term way of guess and/or rank most the efforts then for I longer past. perhaps you've awesome that the fruit And been in now, lastly, and relative ingredients iconic do just and you'll that manifest lower you the personalization had relative half program the longer

of me let I Well, start questions. lot mean a that's --

first Having really growing start mean, continuing the about. beauty Obviously, continuing of I talked business with Sephora. to talk build to me what overall. are business is a about key with Let that strong priorities? -- you some the business you our relationship

a I overall. result mean having in very strong a should having good women's beauty business business

as assortments back-to-school looks reviewed a great in on fashion for women's assortments terrific. the I working key young and items, good our just It's of some hard well. really items We mixture women's. it are

we the go good we as through overall. that period So, feel about very back-to-school

stabilized to it. our XX% growth we that by business. It's the as really to priorities as that it. really and will committed growing Our are we're We're well other it to it our We business, earlier, that that business. talked committed about of of getting help continue and overall and grow piece to definitely stores digital the feel

we wanted, we grow home performance the wasn't underpenetrated we're But decor the progress is that like other quarter year. going that pat businesses home wall but through we're see the and The in, and and to first business, what art go capturing in priorities throughout we as the overall.

serve in as we the everywhere. about need overall And talked dress of business improved the and a We've that, good get casual more our audience, business gifting impulse already for of product piece, about moving we feel very trying versus progress terms and terms mix dress. lot we before, seen to good broad very a about of because we in have to

But rebalance. again, but we're a looking active the for committed we're to business, still

margin. So, talk about Jill let I'll gross the

Yes.

driver your great Cash, finding for to I overall, they our as and combined is and haven't as space around still going key to white margin think, such everything from a traffic with participated that think Kohl's as places customers. we And deliver outlined why we're impulse. is value that, to to I think going gifting, such product. And home the question what that I really Kohl's. Tom So come in But really that in, really is be such decor,

We're going pat. for expand great be us. continues to on to Outdoor

aisle you Kohl's, places into a much with to are we're that a in women's. new with shop bringing have And in the all opportunity. to across So then, have mentioned big Sephora, course, and they're as of the them younger so women, have those we customer, we walk opportunity

focused really we're so, And that elevating on product.

pricing with offers. stackability to starts important. why of confusing, to all the our understand having really don't it But think simplified And I price. want it be that's is We

back Cash traffic present a It plays them has them a And It key way really Kohl's for the bounces to our that a Kohl's another role can want simplified value a time. then in. we back causes that So ecosystem to long and been in it understand part trip. them. of brings because

going industry we're that to as of what we program a great the leading is leverage to continue part as and It's forward move in well. loyalty

we'll into new the So together brought today. to haven't we the that that feels that hit really as into Kohl's outlined the drive Tom our the we great has between space It I as that continue and outlined think focus merchant all filled white products margins initiatives and traffic on stores. with well that the we

skill merchant just Okay. programming speed curious evolving? do new, of of different. capabilities sounds Because and that as lot One follow-up. the Tom, your on lot a set but about this see kind for on need reports. as The you're home, having That's the it you laser-focused inventory how a organization is how agility? of new perhaps, sounds initiatives you and and I'm want, direct ones different versus a open-to-buy constant across you and well like intersects also the the have with

Yes.

the As the organization. on in work many organization, how far always, as want buyers we as merchandise we

that forward, about feel more leadership good of with stand targeting as just plan going part where we might -- terms of the be may in far very goes, as we But we So, areas people. more today.

to receptive really times, couple as a really, everyone Again, mentioned I of is new things.

I develop, we the and and in train teach, that get good it organization and that's merchant place, about to now, is have what focused right very job feel they on. can we're done. But Our

on listening day. good today. the a everyone, call you, Have thank Well, for

conclude That meeting. today's will

disconnect. may You now