- Tools for Investors
- Stock News
- Investing Ideas
- Econ & Policy
- Personal Finance
On Thursday, Kohl’s Corp (NYSE:KSS) reported its third quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Nathan Rich – Citi: This is Nathan Rich filling in for Deb today. I first wanted to ask about E-Commerce. It looks like you guys had the strongest E-Commerce growth that you’ve had in almost two years. Can you talk about what’s driving that?
Wes McDonald – SEVP and CFO: I mean, I think from our perspective it’s just continuing to gain market share with the customer. I think we’ve invested a lot of money in digital marketing this year to drive traffic to the site. Our conversion rate has also improved over the course of the first three quarter. We just installed guided navigation recently and we expect that to be a benefit for the holiday season and we’ve also increased the number of SKUs we have available online. So, I think it’s just starting to mature as a business there. We’ve been behind in terms of some of our competition but we are catching up very rapidly.
Nathan Rich – Citi: Then if I could ask one question on holiday. You guys provided a lot of color on what you’re doing from an inventory and marketing standpoint. I wanted to ask how you’re using technology differently this holiday season.
Wes McDonald – SEVP and CFO: I think from a technology perspective, we’re a testing a few things mostly related to E-Commerce. We are fulfilling not only from our E-Commerce centers but we are sending ship-alone SKUs from our seven retail DCs. We’re also testing order online shipped from store. That’s just a very small test and we’ll get a lot of learnings from that and that will be very beneficial for next holiday. We have electronic signs up in almost all of our stores now so that should save us a lot of money in terms of our (ads quantities), but those are probably the main things.
Fourth Quarter Guidance
Charles Grom – Deutsche Bank: First question is on the fourth quarter guidance. It looks like you tweaked it down a little bit from your former implied guidance that you guys gave out back in August. Just wondering if you could kind of walk us through what changed from your perspective?
Kevin Mansell – Chairman, President and CEO: Sure. I mean, I think fundamentally it’s about sales. We pulled sales down a little bit from what we might have been thinking about for the fourth quarter and there isn’t anything really specific in there and we definitely have been impacted in November by the hurricane on the East Coast that’s certainly an impact. I think our expectation, our hope is that we’ll get at least some of those sales back, but it’s definitely part of the process. I think the other one is just overall, I’m trying to make sure we’re taking a conservatively rational view of the opportunity. We had a good third quarter, but it was essentially in the middle of what our expectation was and so mainly the difference in the fourth quarter is about sales.
Wes McDonald – SEVP and CFO: Yeah, I would say, Chuck, we basically – the reason we guided November below the end of the range we’re just assuming we make our plan in the rest of the way. So obviously we didn’t make our plan in the first week because of the hurricane, if we get some of those sales back that would be upside to what we just guided to.
Charles Grom – Deutsche Bank: Then just to follow-up that, how are trends sort of outside the northeast has there been any CNN effect or election effects for you guys?
Kevin Mansell – Chairman, President and CEO: Well, I mean, there is the seasonality in the business when you get down to that element business by day or pre-election, post-election, we kind of look that historically at past election years to sort of plan the day, so that’s sort of all built into our plan. I mean typically there is some impact pre-election…
Wes McDonald – SEVP and CFO: Post-election.
Kevin Mansell – Chairman, President and CEO: Post-election in the business kind of accelerates, but that’s sort of built into our planning process.
Wes McDonald – SEVP and CFO: You can never plan Halloween or Election Day to low.
Charles Grom – Deutsche Bank: The just, the obvious concern continues to be kind of the inventory level, can you maybe walk us through a little bit more detail in terms of the content by category, where are you placing the biggest bets?
Kevin Mansell – Chairman, President and CEO: I mean from an inventory perspective, I would say I kind of break it into three things as we go into holiday and one additional thing as we transition from holiday out. On the three things going into holiday, first and foremost was we’ve been working hard at managing inventory levels and service levels or the percentage of times we’re in-stock for the customer up year-over-year, because we know we disappointed a lot of customers in our ability to do that. So there is a general focus on ensuring that we are in-stock by size and color across the portfolio of the store with particular emphasis around areas that are trending, categories that are doing particularly well. Second, we know last year that we were not well positioned for gifts and we lost share to others when it came to the gift giving categories and so there has been a very big focus on creating gift headquarters strategy for November and December for the customer for holiday and you should be able to see that in our stores in both our in-isle and in-department, outpost and presentations. It’s built around this marketing handle of Dream for Christmas and that’s been a focus area as well. Then the third area probably just as important as the gift has been our great value program and the great value program generally is about opening price point items throughout the store in every single category that are probably leaning more towards basic I would say. They are not all basic items but they have a tendency to lean that way. So, those are kind of the three things where we are focusing inventory going into the holiday. Then the last thing which is really important is last year with the results that we had we did a very poor job of transitioning into new spring selling and so in many parts of the country as we moved into December we didn’t have new fresh receipts coming in to be prepare the service to customer in January, and February and March and that’s been a major course correction for us. So, those are kind of the four elements.
Charles Grom – Deutsche Bank: Then my follow-up question, just in the past few months there have been some positive developments in your business with traffic getting better and some better trends in the non-credit customer. When you look ahead how confident are you guys that those trends are going to continue?
Kevin Mansell – Chairman, President and CEO: All the elements are in place. I mean, I think we’ve spend a lot of time studying what went wrong in the fourth quarter last and continued into the spring as you know and a lot of it was about servicing the customer properly, being competitive and being a (gift headquarters) for holiday with particular emphasis on these kind of narrow and deep really important items, we call them the great value items, the really key items and a constant flow of receipts. So, I guess to the extent that you can be confident coming out of a quarter that had improved sales results. October was a really good month for us. We saw it building, so all very, very positive.
Don't miss one of the biggest bull markets in history! Covers Gold, Silver, Gold & Silver stocks, and miners.
There's always a bull market in some sector! Find the best opportunities in commodities.