Kohl’s will shut 18 stores in the coming weeks as the department store chain looks to boost sales following a flat fourth quarter.
Kevin Mansell, the retailer’s chairman, president and CEO, said closing the underperforming stores would generate annual savings of approximately $45 million with an additional $10 million in annual depreciation savings.
“While the decision to close stores is a difficult one, we evaluated all of the elements that contribute to making a store successful, and we were thoughtful and strategic in our approach. We are committed to leveraging our resources on our more productive assets,” he said.
Specifics on which stores will close will be announced in March. The retailer operates 1,164 stores in 49 states.
As the company shuts a handful of larger format locations, Kohl’s said it would open seven smaller footprint locations as part of a pilot program. In addition, two Off-Aisle pilot stores will open in Wisconsin and 12 Fila outlet stores are also planned for this year. The Fila stores mark Kohl’s first entry into the outlet space.
On the revenue side, Kohl’s fourth quarter sales for the period ending January 30 were $6.38 billion, up 0.8% year-over-year. Annual sales were $19.2 billion, up 1% year-over-year. Quarterly comparable store sales were up 0.4% with yearly comps up 0.7%.
While Mansell said the company’s 4% sales increase between Thanksgiving and Christmas was “encouraging,” he noted slow sales in other parts of the quarter offset this growth.
“Softness in early November and in January when demand for cold weather goods was especially low, resulted in a quarterly comparable sales increase of 0.4%, which was below our expectations,” he added.
The company expects the coming year to see continued softness in the retail marketplace. It forecasts company-wide sales and comparable store sales to remain largely flat for 2016.