Kohl's CEO Michelle Gass said the company is uniquely positioned to capitalize on current customer demand for comfortableapparel and loungewear during the pandemic.- On a call with investors on Tuesday, Gass said the company will "lean further" on existing partnerships with activewear companies, like Champion, while introducing new partners including Lands' End and Toms Shoes.
- Kohl's beat Wall Street expectations on Tuesday, despite posting a decline in revenue of 23% in its second quarter.
Kohl's is leaning into its status as a "casual destination," in an effort to make it through the rest of the pandemic.
On a call with investors on Tuesday, CEO Michelle Gass said the company is uniquely positioned to capitalize on customer demand for comfortable apparel and loungewear while shoppers remain at home.
Despite reporting a year-over-year decline in revenue of 23% – down to $3.4 billion – during the second quarter of 2020, Kohl's still managed to beat out Wall Street expectations, which executives attributed to rising categories like activewear.
"Kohl's has always been known as a casual destination, and we will take full advantage of growing customer trends, living their life more casually," Gass told analysts on the call. "Today, more consumers are working from home, adopting flexible work schedules, and are dressing more comfortably and casually. We believe these trends will carry on beyond COVID."
She added that the retailer is "optimizing and evolving our assortment to reflect these trends."
Kohl's will continue to double down and "lean further" on existing activewear brands sold at the retailer, like Champion, while introducing new partners including Lands' End and Toms Shoes. Kohl's will also start dedicating more of its inventory space to these types of brands across the company, Gass said.
Sales in the company's activewear category grew by 70% on its ecommerce channels in the last quarter, according to Kohl's CFO Jill Trimm,. She attributed the growth to continued investment in national brand partnerships with Nike, Under Armour, and Adidas, as well as expanded focus in areas like plus-size and big-and-tall.
Casualwear has continued to boom during the pandemic, as homebound Americans and newly remote office workers eschew suits, pencil skirts, and even jeans in favor of leggings, sweatpants, and day dresses. Categories like dress shoes have also taken a hit, as consumers increasingly trade in their heels for Birkenstocks and Crocs.
According to a report by the consumer intelligence platform CivicScience, an estimated 20% of adults said they've purchased leisurewear since the start of the outbreak.
Speaking on the Kohl's call, Gass said the pandemic is ultimately "accelerating important movements that have been underway for some time."
"Customers are adopting more active and casual lifestyles, and they are shopping more digitally," she said. "COVID has also changed the competitive landscape, creating significant industry disruption."