Kohls Corp Q4 2024 Earnings Call Transcript

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

Question: Mark Altschwager - Baird - Analyst : Could you talk us through your assessment of what has been working, what hasn't been working with the merchandizing strategy, where you believe you can affect the most change in the near term, what may take longer to implement? And this bigger picture, what gives you confidence that Kohl's can return to growth?

Question: Mark Altschwager - Baird - Analyst : And just follow up, I guess either for Ashley or Jill. What are the implications from a margin perspective as you aim to elevate the quality of the private brands while also broadening the brand inclusion with the promotional offers. And on the promotional offer side, what has been the feedback from your brand partners initially?

Question: Dana Telsey - Telsey Group - Analyst : And as you think about the store profile, we just heard about the 27 store closings that was announced like a month or so ago. How do you think of the store base? What are you looking for? We always knew that they had that they were profitable stores. What's the right mix to be both size and number? And then if you look at the merchandise assortment, given the reset that's going on and we've been through active, we've been through numbers of different things. What do you want the mix to look like and what kind of margins do you think it's attainable for the business?

Question: Dana Telsey - Telsey Group - Analyst : And just any comments on your customer, what you're seeing from the customer, how they performed exiting the fourth quarter and what you're looking for them going forward.

Question: Oliver Chen - TD Cowen - Analyst : We were curious about which initiatives would be earlier versus later and what's your take on what might be more difficult to achieve versus longer -- lower hanging fruit? And Jill, you, you've had the experience of many changes at Kohl's over the years, as well as management. What are your thoughts about how this may be different and comparing it and contrasting it to aspects of the past? And Jill, as we model free cash flow, it's certainly less than last year. Are there puts and takes in networking capital and CapEx that we should know about to help inform the decline? We're modeling like less than half of the free cash flow this year versus last.

Question: Oliver Chen - TD Cowen - Analyst : And Jill, what's your context for the nature of what needs to be done now, relative to your experience? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 1:00PM, KSS.N - Q4 2024 Kohls Corp Earnings Call

Question: Oliver Chen - TD Cowen - Analyst : And finally, just to follow up, Ashley, as you think about value intensely, what's the interplay between supply chain speed and agility relative to value? I think we're in a permanent phase of like unprecedented levels of volatility, which may require shorter lead times, but I know you're often balancing that against price and, transport costs.

Question: Michael Binetti - Evercore - Analyst : Could you maybe help us -- can you speak to the expectations going forward for Sephora, this year in both, the same store sales or store editions? I guess, secondly, could you explain the comment that the changes the last few years have caused some friction with the legacy existing core Kohl's customer, maybe your answer was embedded in a couple of the other answers you have here. I just wanted to ask specifically what you saw with that comment. And then also elaborate a little bit on the comment of how you're addressing promotions where there's a lot of efficiency that you can take costs out but push the savings into the price point just so we understand a little bit more tactically what you mean by that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 1:00PM, KSS.N - Q4 2024 Kohls Corp Earnings Call

Question: Michael Binetti - Evercore - Analyst : And then the promotion comment.

Question: Michael Binetti - Evercore - Analyst : Yeah, I just wanted to see if you could elaborate on the comment that you see an opportunity to make the promotions efficient, take some the cost out and push that those savings into the price point, just for us spreadsheet folks, what does that actually mean a little bit more tactically on a retail floor. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 1:00PM, KSS.N - Q4 2024 Kohls Corp Earnings Call

Question: Ashley Helgans - Jefferies - Analyst : So to start, maybe you could just talk about what sort of kind of consumer health level is embedded in the guide for this upcoming year. And then Ashley, for you, how are you thinking about the right mix of private label versus national brands?

Question: Charles Grom - Gordon Haskett - Analyst : Regaining traction with lost customers can be hard and oftentimes can take a long time. I'm curious what steps you're taking to improve on this front. You talked about rebuilding the private brand mix, I'm just curious like what else you can do to go back to those customers, you have a big file, how are you attacking that and is there a cost associated with that as well?

Question: Charles Grom - Gordon Haskett - Analyst : And then on the store fleet, you're closing 27 stores, and a lot of your peers are more aggressive on that front. I'm curious like what was the logic behind the 27 and I guess why not close more stores and I guess are you prohibited because of the Sephora deal of the closing stores, so that's why you're not getting more aggressive on that front?

Question: Matthew Boss - JP Morgan - Analyst : So Jill, could you speak to the overall health and composition of inventories exiting the fourth quarter? And then just with the cost structure, maybe if you could speak to further areas of rationalization or is 1% to 2% still the comp required for SG&A leverage in the model.

Question: Brooke Roach - Goldman Sachs - Analyst : Ashley, I was hoping we could follow up on Mark's question and speak to the process of reversing the brand exclusions on the coupon program. What does that look like in practice and are you seeing any headway on brand conversations in getting those exclusions removed? And then for Jill, I was hoping you could provide some additional color on what you're seeing in your credit business excluding the accounting change, how is the co-branded partnership scaling and how should we be thinking about the contribution from balances and your credit customer health? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 1:00PM, KSS.N - Q4 2024 Kohls Corp Earnings Call