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Like several of its department store peers, Kohl's is struggling to regain traction in an uncertain retail landscape.
The Wisconsin-based retailer reported disappointing earnings this week, missing Wall Street expectations with meager comparable sales growth of just 0.4%, while profits dropped by 24%, causing shares to tumble. Though the company hasn't been shy to innovate - including testing off-price store models and teaming up with Amazon on an in-store return program - it seems it hasn't been enough to stave off the ongoing retail apocalypse.
"Department stores have been struggling for a long time, but they still generate billions of dollars," Sucharita Kodali, vice president and principal analyst at Forrester, told Business Insider earlier this week. "That's not going to evaporate overnight, but we're still seeing this slow chipping away. Sometimes a well-executed program can help stave off the decline. Every quarter they have to pull a rabbit out of a hat."
While there may still be time for Kohl's to turn the business around, it may never regain its early 2000s glory days of bustling stores and events brimming with notable celebrities. Still, the store has a significant national presence, with more than 1,100 stores in 49 states.
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Will Kohl's overcome its struggles? Only time will tell. In the meantime, we took a look at Kohl's rise from a small Midwestern chain started by a Polish immigrant to a national retail powerhouse.
Kohl's was started in Brookfield, Wisconsin, by Maxwell Kohl in 1962.
Kohl was a Polish immigrant who had worked in factories in the US for several years before starting his first company, a small grocery store, at just 26 years old in 1927. The store included "modern-style supermarket" fixtures, like a bakery and deli. Kohl later went on to open 48 supermarkets in Wisconsin before selling the chain in 1970.
Later, he was inspired to transition from the grocery industry to the department store business after experiencing difficulty buying a shirt.
Kohl modeled his department store after his grocery store chain, with a particular focus on customer service and finding efficiencies to help lower prices for shoppers.
Kohl opened more stores, and together with his sons ran the business for the next decade before selling the chain in 1972 to the retail division of the British American Tobacco Company.
Kohl's sons retained leadership roles at the company even as it changed ownership in subsequent years.
In 1986, former store manager William Kellogg became CEO of Kohl's after taking over the company with his partners John Herma and Jay Baker as part of a buyout.
That same year, Kohl's began to invest heavily in sustainability efforts at its stores, including installing solar panels on store roofs.
By 2006, Kohl's started aggressively bringing on big name designers and celebrity partners, starting with launching an exclusive collection with famous wedding dress designer Vera Wang.
Also in 2006, Kohl's brought on the cast of "Laguna Beach" for several meet-and-greet and promotional events.
Kohl's continued to enhance its profile with the help of television stars, including "Gossip Girl" actress Leighton Meester, who attended the launch of Flirt! cosmetics at Kohl's in 2008.
Kohl's also teamed with singers like Avril Lavigne, who launched her Abbey Dawn collection with Kohl's in 2008.
Reality star Lauren Conrad was also a notable celebrity partner, later launching her clothing line Paper Crown exclusively at Kohl's.
In 2010, Jennifer Lopez and then-husband Marc Anthony announced two lifestyle brands that were sold exclusively at Kohl's.
Kohl's continued to turn to celebrities as it worked to build out its private-label brands like Candie's.
Despite these efforts, Kohl's performance was still relatively lackluster. As a result, Kohl's then-CEO Kevin Mansell announced a turnaround program called "The Greatness Agenda" in 2015, setting in motion several new partnerships and initiatives.
"The Greatness Agenda is our multi-year plan and it's working. Since announcing this strategy one year ago, we've changed the trajectory of our performance trend line from negative to positive," Mansell said in a statement at the time.
As part of The Greatness Agenda, Kohl's began increasing its in-store tech services and installed buy-online-pick-up-in-store lockers in 2015.
Looking to capitalize on the growth of off-price store models like TJ Maxx and Nordstrom Rack, Kohl's experimented with one of its own called Off/Aisle, a one-off store it opened in Wisconsin in 2015.
In 2016, Kohl's teamed up with Under Armour in a notable partnership to allow the department store to sell the athletic apparel in stores.
"We shared our conviction and our strategy that we intend to be the destination for active and wellness for the family, and I guess they were inspired by that because we're launching," Kohl's then-chief merchandising officer Michelle Gass told Bloomberg at the time. "Active was one of those areas where we're already seeing strength with Nike and some others, and we said, 'Let's take it to the next level."
Kohl's first started to experience serious trouble in 2017, when shares fell by 19% in January after the retailer warned investors of poor holiday sales.
It was the worst day on record for Kohl's stock. Macy's also dropped by 14% that day.
That same year, Kohl's began experimenting with a pilot partnership with Amazon that would allow shoppers to make returns from the e-commerce giant in select Kohl's stores.
By 2019, Kohl's was starting to show significant signs of struggle, which experts say could be due to a failure to differentiate itself in the age of e-commerce.
"The playbook hasn't changed that drastically. Kohl's focused on getting good merchandising, working with companies like Amazon, and rightsizing stores," Sucharita Kodali, vice president and principal analyst at Forrester, told Business Insider. "They're doing everything to check the boxes, so what you're left with are the dynamics of the industry."
In June 2019, Kohl's announced it would be closing its four off-price Off/Aisle stores in Wisconsin and New Jersey after four years.
"While we've learned a lot from the tests, we also learned that our strength and ongoing improvements in inventory management across the company do not allow us to appropriately stock Off/Aisle stores at scale," Kohl's executive vice president Jon Gross wrote in a memo, according to USA Today.
In November 2019, Kohl's reported meager sales growth that missed Wall Street expectations.
In the third quarter of 2019, sales grew by 0.4% while profits dropped 24% in the same period in 2018.
Looking to the future, experts say Kohl's will need to make some major changes to stay afloat as the modern department store rapidly evolves.
"The brand still has some allure compared to other department stores," Jonathan Treiber, CEO of offer-management platform RevTrax, told Business Insider. "However, they need to focus on their offerings and what niche they can truly 'own' and carve out as a defensible strategy."
