Kohls Corp Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Robert Drbul - Guggenheim Securities - Analyst : Tom, best of luck on your retirement and thanks for all the help over the last few years and actually many years, we go back.

Question: Robert Drbul - Guggenheim Securities - Analyst : Two questions for you. The first one, just when you look at the traffic trends, I think the aggressive actions that you lay out, which ones do you think will be the biggest impact to your traffic, I guess, in Q4, but also into '25? And then the second question is, Jill, on the credit card, can you just give us an update just in terms of the trends, in terms of some of the conversions and if it's actually playing to the way that you thought it would this fall and heading into holiday?

Question: Mark Altschwager - Robert W. Baird & Co. - Analyst : First, Tom, why is now the right time to be passing the torch? A lot of balls in the year right now with some of the strategic changes you've been making. I guess, what are the guardrails you have in place to limit disruption through the transition? And is your successor aligned in terms of a lot of this element on the strategic agenda or should investors be bracing for some bigger changes in the periods ahead?

Question: Mark Altschwager - Robert W. Baird & Co. - Analyst : Thank you for all of that detail. Jill, if I could follow up on credit, you spoke briefly about the co-brand rollout. I know initially, when we thought the late fee change could result in a pretty significant change to the existing credit revenue stream, the co-brand was thought to be an offset to that, which would imply pretty material revenue contribution as we look into 2025. Can you just walk us through the current thoughts there if the late fee change doesn't happen I guess, why wouldn't that be significant upside due to the current run rate of credit revenue?

Question: Mark Altschwager - Robert W. Baird & Co. - Analyst : Excellent. And best of luck over holiday.

Question: Oliver Chen - TD Cowen - Analyst : Tom, you brought a lot of constructive things organization, including speed, agility and new categories. How would you diagnose the issues around the unintended consequences of some of these changes relative to the highly competitive promotional environment? And then second, as we look forward, fixing the core, it's been a multiyear issue in terms of apparel and embracing younger customers and also trying to get sustainably positive comps. But what's your take on what may need to be done to fix the core in terms of the new CEO coming? And lastly (inaudible) replacement, I didn't quite understand that comment in terms of that strategy that you're undertaking, looking forward as well.

Question: Oliver Chen - TD Cowen - Analyst : Okay. Jill, on the guidance, what did you say it assumed for the inventory growth relative to sales in light of what you need to do to inventories? And final question on promos. What's embedded in guidance for merchandise margins and promotions? And does some of that relate to what

Question: Charles Grom - Gordon Haskett Research Advisors - Analyst : Good luck, Tom, with everything. Can you guys just talk about the steps to recapture some of the lost customers that you may have alienated over the past couple of years by deemphasizing the private brands and the jewelry counters? I guess on one hand, it's a big opportunity; on the other hand, it's sometimes very hard to do.

Question: Charles Grom - Gordon Haskett Research Advisors - Analyst : Okay. Great. And then I guess on the new product offerings, particularly Sephora which remains strong, like you said, a two-year stack improvement. I mean there's concerns in the marketplace that, that comp tailwind could moderate. So I guess, what's the game plan to offset that potential deceleration? And can you discuss any improvement you've made on cross-selling across the store when somebody purchases a Sephora product?

Question: Charles Grom - Gordon Haskett Research Advisors - Analyst : Okay. Great. And one quick last one for me. Just we've found 53 minutes, and nobody has talked about the weather, which is pretty remarkable. But your business historically has always been very weather-sensitive. So is there any way to handicap how much of your sales were held back from the warmer temps over the past couple of months?

Question: Dana Telsey - Telsey Advisory Group - Analyst : As you think about a big picture view of what's happening and where we are now, how much of it would you say, Tom, is internal that can be corrected over time? How much of it was the macro factors? And if you could push 1 button to accelerate something, what would that be?

Question: Dana Telsey - Telsey Advisory Group - Analyst : And Jill, anything on the puts and takes of expenses, given that you're managing so carefully, how you're thinking about labor cost this year compared to last year as we go through the season?

Question: Paul Lejuez - Citi - Analyst : Just a couple of quick ones. Curious where you think you might be moving customers to what other retailers might be taking share? Second, as you get into private brands, again, in a little bit of a bigger way, petites, jewelry, what are you giving up in terms of floor space? What might feel the pressure? And then curious if you're thinking any differently about closing stores?