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Kohl’s has an Inventory Mess on its Hands

It may only be Kohl’s to blame for its inability to get a break. The department store provided a gloomy prediction for 2022 on Thursday, saying it anticipates full-year sales to decline 5% to 6% from a year ago. That high inflation is to blame for stopping customers, particularly its middle-income customers, from spending more at its stores. The business also disclosed a decline in earnings and revenue for the three months that ended July 30. On Thursday, stock dropped more than 7%.

However, the economy is not its sole issue. Similar to other major retailers like Target (TGT) and Walmart (WMT), Kohl’s (KSS) is constrained by a big amount of extra Inventory that it is unable to sell. The chain’s Inventory increased 48% during the quarter compared to last year’s period. According to CEO Michelle Gass, “We have altered our plans, implementing initiatives to cut Inventory and lower expenses to accommodate a tougher demand outlook.

Kohl’s is the biggest department store chain in the US, with more than 1,100 US locations and yearly sales of over $19 billion. But the business has had a hard time charting its course. The store is experimenting with several strategies to remain relevant, particularly to younger customers. In a recent partnership, it opened miniature Sephora storefronts at some of its sites. Since last August, a million new consumers who are younger, more diverse, and frequent shoppers have joined Kohl’s, according to the retailer.

Additionally, the shop revealed last week that all its locations would offer self-pickup for online orders placed within a two-hour window. However, despite being vital for Kohl’s, all of these initiatives can’t completely mask the chain’s most fundamental issue, according to Neil Saunders, managing director of GlobalData Retail and a retail analyst.

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