As the retailer faces pressure from activists to consider a sale and unlock value from its real estate, it has issued new long-term financial targets.
Ahead of a planned virtual meeting with investors, Kohl's announced that it aims to grow its Sephora business to more than $2 billion in annual sales. About 200 of the Sephora shop-in-shops have opened so far, and are on track to hit 850 by next year. The company hasn't previously broken out revenue from its stores.
More than 100 smaller-format shops will be opened by Kohl's over the next four years in a bid to attract new customers. The smaller stores are about 35,000 square feet on average, with one of the first being tested in the Seattle area. The typical store is 80,000 square feet.
She said that this year is a big one for them.
According to Gass, Kohl's is undergoing a significant transformation of its business model to be the retailer of choice in the active and casual lifestyle categories.
In addition to the long-term revenue goal, the company said it will be targeting operating margins of between 7% and 8% annually, per-share earnings growth of a mid-to-high single-digit percentage, and operating cash flow of over $5.5 billion.
The meeting with investors and analysts on Monday is under more scrutiny as the retailer faces increased pressure from activist groups who want to take control of the board.
The takeover offers that were on the table were rejected by the company. In the last few weeks, it has been working with bankers and other financial advisors to look for potential buyers.
Activists Macellum Advisors and Engine Capital have argued that Kohl's has performed worse than other off-mall retailers such as Target and TJ Maxx. Macy's stock is up about 65% over the past year, while Kohl's stock is up about 6. The firms have urged the company to sell some of its real estate and lease it back in order to raise capital.
Macellum said it was skeptical of the future of the retailer given the current board of directors and management configuration.
Macellum Managing Partner Jonathan Duskin asked, "Why were sales uniquely hampered by supply chain issues compared to many other retailer peers?"
The company reported revenue of $6.22 billion for the three-month period, which was slightly short of analysts' estimates, but it issued a more upbeat revenue outlook for the year. The retailer said it would buy back at least $1 billion of its stock this year.
On Monday, Kohl's emphasized its plans to keep growing its assortment of active and casual apparel and accessories. The company hopes to grow its women's dress business, as well as expand outdoor and swim wear, and expand its selection of inclusive sizes.
Thanks to its ongoing efforts to make it easier for visitors to find brands and shop on its website, the company is expecting its digital business to bring in $8 billion in revenue over the long term. The company's total revenue in the fiscal year was up from a year earlier.
Gass said that they have a strong agenda of growth drivers that are going to have a long tailwind.
The company will be testing self-service returns and check-out offerings in stores, as well as rolling out a self-service buy online, pick up in store option to all locations this year.
The virtual investor day is scheduled to start at 9 am.
You can find the full press release here.
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