Kohl's Corp. (NYSE:KSS) Q3 2019 Earnings Conference Call - Final Transcript

Nov 19, 2019 • 09:00 am ET


Kohl's Corp. (NYSE:KSS) Q3 2019 Earnings Conference Call - Final Transcript


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Q & A

[Operator Instructions] Your first question comes from the line of Oliver Chen from Cowen and Company. Please go ahead.

Oliver Chen

Hi. Thank you and congratulations, Jill. Regarding promotions, it's been a promotional environment for a while, so I would love your thoughts on how this is different this year and also what are your thoughts on what you're seeing with traffic, it sounds like you're pretty happy with traffic. Has it been volatile? And then finally, would love more color on reflowing the layout of Women's as it was a short-term disruption, but it seems like what the customer ultimately wants, how do we put that in the context of a lot of other new introductions that you're adding to the store? Thank you.

Michelle Gass

Thanks, Oliver for the question. So I'll address each of your questions sort of separately. First of all, your question around the promotional environment. As we expressed in our remarks, we did see a heightened promotional environment in the third quarter and especially as we entered into the more traditional fall season in September. I think for us at Kohl's, we stand for value. We have the best loyalty program in the industry and we're really known and famous for delivering outstanding value. So we must maintain and reserve this position. We're at a really unique time at the company and with all of our initiatives, all the innovation, the new brands, the traffic we're seeing for Amazon Returns, it's really important that we capitalize on this moment and drive market share and customer acquisition. So given the landscape and it is what it is and our guidance reflects that we expect that to continue into Q4, we are going to lean in and make the short-term investment in pricing and promotion as we need to, to make sure that we can capture these customers and importantly get them on our loyalty ladder for the long term.

Secondly, to your point on traffic, overall traffic for the quarter, we are pleased, and while -- as I said in my remarks, we would have expected a different better result for the quarter. We made tremendous progress in both traffic and sales. And from the first half of the year, we're up 360 basis points to get to a positive comp, and for us, momentum on the business and driving long-term health in the business, it has to start with growth. And then that has to start with traffic and traffic has been and will continue to be the number one priority and we are seeing really solid traffic in our stores and that's coming from the initiatives we're launching, our marketing efforts and, yes, the ramp up of the Amazon Returns program.

I would say where the volatility took place in the quarter was, we came out of the gates really strong in back-to-school, things softened up in September, combination of factors, promotional environment we've hit on, weather becoming unseasonable and unfavorable for us, and then we did have