Please fill out this field with valid email address. Kohls is one of the most popular department stores in the United States. Sales are stalling in 2022, but department store closures have stayed flat since early 2021. There have been additional closings but no large closing announcements have been made since then. Then the pandemic struck, and the industry was hit with an unprecedented number of store closures according to UBS, the retail industry lost 1,800 stores between January 2020 and March 2021. But then sales growth began to slow, even as store closures have remained flat since 2021. Despite sales improving in the third quarter,L Brands CEOAndrew Meslow said in November the company was cautious "given anticipated constraints on store traffic, online fulfillment and shipping capacity, as well as other uncertainties related to the COVID pandemic.". Port Charlotte Town Center, FL 7. Given rising input cost pressures, interest rates, faltering economic demand, and its already low margins, I believe it is more than likely Kohl's will face a breach of covenants over the coming year or two. 
Stores closing in 2021: 45 Paradise Valley, AZ 2. The closures are part of Macy's three-year plan to close one-fifth of its stores, or roughly 125 locations, which was first announced before the coronavirus pandemic in February 2020. Thus far, its gross margins have been maintained while its operating expense-to-sales ratio has slowly climbed higher. KGO. 
I believe KSS is a short opportunity with potential catalysts being a dividend cut, weak holiday sales, and its early 2023 bond maturity. The closures are part of a previously announced plan by Macy's to shut 125 locations by 2023, which the retailer outlined last February. There's one bright spot retailers are in a position to benefit from:E-commerce sales growth has been enormous and is expected to continue. (See the list below. The closures are part of Macy's three-year plan to close one-fifth of its stores, or roughly 125 locations, which was first announced before the coronavirus pandemic in February 2020. Here's a list of major retailers for whom 2021 could be a make-or-break year based on USA TODAY research, public data and analyst reports: The department store chain filed for Chapter 11 bankruptcy protection in May after its sales collapsed amid temporary store closures. We expect to announce about 10 closures in January with more details on the remaining stores to come later in 2022, Mitchell said during the retailer's quarterly earnings call, noting that some of the closings have been delayed and that the company continues to open more of its smaller, off-mall stores. Forward-looking statements relate to the date initially made, and Kohls undertakes no obligation to update them. "These middle players, the middle to better players like Macy's and Nordstrom, are kind of trapped," he said. Exact closing dates were unavailable. The closures are part of a previously announced plan by Macy's to shut 125 locations by 2023, which the retailer outlined last February. Unlike Macys and Nordstrom, which have been closing hundreds of underperforming stores over the past few years, Kohls large fleet of stores has remained relatively stable because the majority of its locations, roughly 95%, are outside of malls, Morningstar analysts, led by VP Steven Jellinek, wrote in a note. Even more, Kohl's has growing inventories and fragile cash levels, creating significant liquidity risk in the event of a slowdown. WebKohl's Is Going Out Of Business? 
As such, doubling its total interest costs (likely given the rise in interest rates and downgrade) may absorb much of its net income. 
Days into the new year, the department store chain confirmed a new round of store closures to USA TODAY. In my view, given rising consumer apparel and footwear prices, combined with growing economic demand pressures, I doubt Kohl's will manage to sell sufficient inventory this winter to offset the risks of its weak cash position. Commons at Federal Way, WA 30. We will continue to serve customers on Kohls.com and our Kohls App, and we look forward to reopening our stores soon to serve families across the country.. All Rights Reserved. In January 2020, the retailer said it planned to shutter 91 of its stores by 2022 in an effort to save $80 million each year over the next three years. Data is a real-time snapshot *Data is delayed at least 15 minutes. Kohl's ended last quarter with high inventories and low cash, so its winter sales must be strong to maintain its liquidity position. While the analysts said they do not predict a slew of store closures in the short term they outlined the potential risk for certain stores in underperforming locations like malls or stores with upcoming lease expirations. As rates rise and demand declines, many companies have seen stark declines in their earnings outlooks. On May 12, 2021, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.25 per share. Kohls served millions of customers both in store and online throughout Black Friday week last year, and we look forward to delivering that same incredible experience to our customers again this year. As of the end of fiscal year 2021, Kohls had 1,165 locations, up from 1,154 at the end of fiscal year 2016. While there is potential value in Kohl's, I believe the stock is among a growing number of value traps. The dividend is payable June 23, 2021 to shareholders of record at the close of business on June 9, 2021. Fashion retailer Express launched a turnaround planin January 2020and announced it would close 100 of its 600 stores. As part of the bankruptcy, the company announced plans to close more than 1,000 stores across all of its brands permanently. The Bloomingdales closure is expected by the end of the last quarter of 2021, which is Jan. 29. Powered by Macys. A few bad breaks haven't helped: A merger deal with grocery chain Albertsons collapsed in 2018, leaving the company's path to reinvention unclear. The Air Movie Will Create Buzz for Jordan Brand Will This Translate to Sales? According to a report from CNBC, Kohls is closing stores in 2021. Lima, OH 35. See below: Looking just at its long-term debt, the company currently pays an effective interest rate of 4.89% (10-Q pg. And while that disruption creates challenges, it also holds opportunity," Gennette told analysts during the September quarterlyearnings call. Moody's projected growth of 14% to 15% for e-commerce sales in 2021, even as people are expected to return to stores as the pandemic ebbs. Save. It successfully navigated the debt-cutting process and emerged from bankruptcy in September, giving it another shot at achieving sustainability. Warehouse Reimagined model which consolidates the retailers 20,000 to 25,000 square foot-stores into more efficient 15,000 square-foot locations. This problem is made more complicated by the large size of Kohls stores, which tend to occupy more than 70,000 square feet. From the shutdown in March to various reopening protocols and safety concerns for their employees, many of our favorite places have been forced to permanently close their doors. Tuesday Morning was already struggling when thecoronavirus pandemicbegan and went into a free fall when it was forced to temporarily close its locations due to the crisis. Further, I think its EPS will likely decline given these woes, giving the stock little discount value today. Macy's is closing dozens of department stores this year. (See a full list of the closing stores and recently closed locations below.) Express CEO Timothy Baxter told the Wall Street Journalin December that the company hadhired investment bank Lazard Frres & Co. to help raise enough financing to carry the company through the pandemic. The global economy is transitioning as rising interest rates lower economic demand. Its financial troubles mounted in 2020. Richland Mall, OH 21. He has professional experience in the private equity, real estate, and economic research industry. "A lot of the weaker players that we have now in the distressed space are still owned by private equity firms and still have weak balance sheets," Moody's executiveChadha said. Such statements are subject to certain risks and uncertainties, which could cause Kohl's actual results to differ materially from those anticipated by the forward-looking statements. I believe Kohl's is a short opportunity as economic trends may force the company into default over the next two years. For shopping news, tips and deals, join us onourShopping Ninjas Facebook group. 13. 2023 Fairchild Publishing, LLC. I am not receiving compensation for it (other than from Seeking Alpha). Cautionary Statements Regarding Forward-Looking Information Last January, another round of closings was announced. A wave of department store closures could hit in 2023, according to UBS analysts. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body. Commack, NY 5. To demonstrate our support of the efforts underway to contain the spread of the coronavirus, we are closing all Kohls stores through at least The decision comes after positive response from last year's closure on Thanksgiving Day, as well as evolving preferences in how and when customers want to shop during the holiday season. Both chains were owned by a company that filed for Chapter 11 bankruptcy protection in 2018 and narrowly escaped liquidation in early 2019. BBB debt has an effective average yield of 5.75%. JJBers / Wikimedia Commons. "For a long time, weve seen foot traffic at department stores declining," Hudgins said. College Mall, IN 13. Tri-County Mall, OH 22. I wrote this article myself, and it expresses my own opinions. 
Company officials said they still plan to separate Victoria's Secret and Bath & Body Works into two companies, which has pleased investors. For retailers that survived the catastrophe that was 2020, there's hope on the horizon in 2021. See below: Over the coming quarters, I expect Kohl's operating expense ratio will rise faster, given wage pressures. The company's quarterly and annual reports do not state specific covenant maximum leverage ratios but note that default, cross-default, or acceleration would occur if leverage ratios are broken (10-K pg. As COVID-19 casescontinue to increase across the nation with the omicron variant, Macy's said it was temporarily revising store hours for the rest of January at all of its Macy's stores. On May 12, 2021, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.25 per share. "These trends are likely not good for department stores as both luxury companies as well as off-price retailers compete directly with department stores," UBS analysts Jay Sole, Mauricio Serna, Shoshana Pollack, and Tiffany Agard wrote. On May 12, 2021, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.25 per share. The pandemic led Macy's and other retailers to temporarily close stores for in-person shopping for months. The list of its woes continues to grow as activist investors recently urged the removal of Kohl's CEO. 
Sales are stalling in 2022, but department store closures have stayed flat since early 2021. 
Macys. COVID-19 test prices:Walmart, Kroger increase prices of at-home rapid tests, Walmart InHome delivery:Walmart expanding 'InHome' delivery service that delivers groceries to the kitchen or garage. Kohls could be hit with some store closures in the not-so-distant future, according to a Tuesday report from credit rating business Morningstar. The closures are part of a previously announced plan by Macy's to shut 125 locations by 2023, which the retailer outlined last February. These risks can be offset by using options, but KSS has a ~60% implied volatility level, making these options quite costly. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Sangertown Square, NY 18. Kohls will provide further updates, including news on store reopenings, at Corporate.Kohls.com. While there are some avenues Kohl's can take to buy time, I believe there is very little the company can do to create a stable competitive moat necessary for long-term survival. These trends indicate that apparel and footwear import prices are rising. Kohl's recently lost its investment grade credit rating, meaning its interest costs may rise significantly upon its 2023 debt maturities. Kohls announced today that as the result of the escalating COVID-19 pandemic the company will temporarily close its stores nationwide effective Thursday, March 19 at 7 p.m. local time. Here's the full list of Macy's stores expected to close this year: 1. A wave of closures may be coming for US department stores. Monday, March 21, 2016. Hyatt Regency (Maui), HI 10. Macy's along withother department store chainstemporarily shuttered all of its stores amid the pandemic in mid-March. The 18 stores (which represents less than 1 percent of total sales) will be announced by the end of March, according to the companys most recent shareholder report, delivered Feb. 25 from That said, investors must consider the risk of financial restructuring when considering low-margin retailers with high leverage. Monday, March 21, 2016. The 18 stores (which represents less than 1 percent of total sales) will be announced by the end of March, according to the companys most recent shareholder report, delivered Feb. 25 from 13. Rivercenter, TX 27. Customers looking to shop Kohls on Thanksgiving Day will be able to shop on Kohls.com and in the Kohls App. While 2020 was a mess for many retailers, leading to the liquidation of chains like Stein Mart and Pier 1 Imports, it was a boon to others, like Walmart, Target and Dick's Sporting Goods. Kohl's is closing seven Southern California stores and a total of nine throughout the state, according to a press release Monday. Given Kohls recent financial performance, the company may need to selectively exit underperforming stores as these leases come to a close, analysts said. It terminated 31 U.S. locations that very month, and 35 additional stores were set to close by the end of January 2021. 
9). The decision comes after positive response from last year's closure on Thanksgiving Day, as well as evolving preferences in how and when customers want to shop during the holiday season. The companyposted a loss of $432 million in the first nine months of 2020, compared with a loss of $264 million in the same period of 2019. KGO. S&P Global Ratings downgraded its debt further to BB+ from BBB-, meaning it is no longer "investment grade" debt. Save. In my opinion, changing management is unlikely to save Kohls, given the combination of secular and cyclical pressures on the company. The report cites an email from Kohls CEO Michelle Gass, who said that the company is closing underperforming stores in an effort to focus on its most profitable locations. The closures by Macy's will add to the glut of retail real estate that has gone back on the market in recent years, pummeling landlords. Morningstar also found that the highest concentration of lease rollover in the next decade will be in 2024, when 23 leases expire. 
Mark Cohen, director of retail studies at Columbia University, shared a similar forecast in September. The company has created an online platform that is somewhat attractive, but its fulfillment network is not nearly as strong as Amazon's. KGO. Kohl's Corp. is closing all of its more than 1,100 retail stores nationwide and making other financial moves in response falling sales tied to the coronavirus pandemic. Banks stores. 
Liquidation sales have already started at some of the locations that are closing. Access your favorite topics in a personalized feed while you're on the go. This change is significant because BBB debt has an effective average yield of 5.75% today, while BB debt has an average effective yield of around 7.25%. February 23, 2021. To demonstrate our support of the efforts underway to contain the spread of the coronavirus, we are closing all Kohls stores through at least Kohl's recently lost its investment grade credit rating, meaning its interest costs may rise significantly upon its 2023 debt maturities. Givenrestrictions on large gatherings intended to reduce the transmission of the coronavirus, the market for balloons, streamers, party decorations and costumes is naturally limited. Cambridgeside, MA 34. Macy's told employees at 45 locations that their stores would close in 2021, CNBC first reported. Essentially, if the company suffers a decline in EBIT, then much of its debt may become immediately due, forcing the company into Chapter 11 bankruptcy. After the pandemic struck, Sycamorewent to courttoback out of the dealand in early May, both partiescalled it off. Of course, investor concerns regarding such changes have led to significant declines in the stock prices of many retail companies, leading to very low valuation multiples. Indeed, the primary economic trend benefiting Kohl's has been the bankruptcy is its competitors, such as JCPenney, improving Kohl's market share. Midway through 2022, department stores were bucking the otherwise gloomy retail trends, reporting strong first-quarter earnings thanks to resilient shoppers shelling out for apparel and footwear for traveling, socializing, and returning to the office. Mike Pence moves closer to testifying in DOJ investigation into Trump after declining to appeal special counsel's subpoena, We'll tell you how and send money tips, advice delivered right to your inbox. February 23, 2021. See the list. That's because months of inflation and a looming recession are eating into sales at mid-tier retailers, analysts say. It is incorrect to assume "stocks always bounce back" as those which fail are often delisted. Some sectors have only seen minor negative revisions while others, such as consumer discretionary retail, are seeing more dramatic pressures. Macy's currently operates 544 of its namesake department stores, along with 34 Bloomingdale's locations, 19 Bloomingdale's outlets and 166 Bluemercury shops, according to its website. Northpark Mall, MO 16. 
See below: Its high inventory going into winter sales protects partially against Chinese import woes. Kohl's is closing seven Southern California stores and a total of nine throughout the state, according to a press release Monday. That's according to analysts at UBS, who predicted this week that national chains could have to shutter some brick-and-mortar locations in 2023 even those that survived the combined challenges of the retail apocalypse, which devastated the industry from 2017 to 2020, and the pandemic shutdowns. While that's good news for fans of the chain founded by James Cash Penney that remains an icon of the era when shopping malls dominated American retail, it's not out of the woods yet. We will support store associates with two calendar weeks of pay, said Michelle Gass, Kohls chief executive officer. Kohls is aware that it has more selling space than it needs and plans to open smaller stores, said David Swartz, equity analyst for Morningstar Research Services LLC. 2023 Fairchild Publishing, LLC. Given the secular pressures on Kohl's (competitive disadvantages), acute economic pressures (rising costs and falling demand), its low quick ratio (and rising inventories), and rising interest rates, I believe bankruptcy is relatively likely over the coming 12-24 months. Woodfield, IL (Furniture)4. However, given Kohl's low quick ratio (liquid current assets-to-current liabilities), it must sell its inventory or risk liquidity troubles. One of the first major retailers to file for bankruptcy protection during the pandemic, Neiman Marcus entered Chapter 11 in early May. seeing more dramatic pressures. However, due to the COVID-19 pandemic, Kohls has announced that they will be closed on Christmas Day in 2021. It terminated 31 U.S. locations that very month, and 35 additional stores were set to close by the end of January 2021. Despitethe crushing shutdowns that temporarily brought physical sales to a standstill in the early months of the coronavirus pandemicacross the nation,the industry's struggling retailers are now hoping that a nationwide vaccination campaign will bring them back from the brink. Greenbriar, GA 9. 2023 USA TODAY, a division of Gannett Satellite Information Network, LLC. Much of the company's remaining debt expires in 2025; however, the remaining portion (~60%) does not expire until 2030-2045. A wave of department store closures could hit in 2023, according to UBS analysts. "In addition, based on our own retail traffic trends we believe she remains hesitant to shop in stores.". Kohl's operates with a thin 3% profit margin, so it would only take a slight decrease in gross margins or a small rise in operating costs to erase much of the company's bottom line. Representatives for Nordstrom and Kohl's did not immediately respond to Insider's request for comment. 
These risks and uncertainties include, but are not limited to, those described in Item 1A in Kohl's Annual Report on Form 10-K, which is expressly incorporated herein by reference, and other factors as may periodically be described in Kohl's filings with the SEC. Marlow Heights, MD14. Please. The report cites an email from Kohls CEO Michelle Gass, who said that the company is closing underperforming stores in an effort to focus on its most profitable locations. Sign up here. JJBers / Wikimedia Commons. While rising interest costs will lower Kohl's income, it alone should not reduce it by more than 20-30% over the next two years. With the openings and closings, it has 704 Victoria's Secret and 143 Pink stores. And throughout the holiday season Kohls will offer the great national and only-at-Kohls brands, and incredible value through Kohls Cash and Kohl's Rewards that customers love. As our business evolves,we continue to optimize and reposition our store fleet to more effectively support our omnichannel sales growth and expand market share., Save better, spend better:Money tips and advice delivered right to your inbox. Crocs Names Salehe Bembury Creative Director of His Pollex Pod Collection, How Stores Will Help Academy Sports + Outdoors Hit $10B in Sales by 2027, Uniqlo to Open 20 Stores Annually as It Moves Toward Goal of 200 Stores in North America, Dollar General Invests $100 Million Towards Brand Growth in 2023, How to Shop Carrie Bradshaws Shoes from And Just Like That, The 8 Best Indoor Cycling Shoes, According to Fitness Experts, Shimano Women's IC5 Indoor Cycling Shoe $125, The 21 Most Comfortable Shoes for Men Youll Want to Live in, The 26 Best Walking Shoes for Women of 2023, Tested and Reviewed by Experts and Editors, FN CEO Summit Makes a Major Return to Miami With The Master Class 2023, Jaden Smith on Defying Gender Norms, Fashions Future & More, Jasmine Jordan on the Potential Trillions Her Father Michael Jordan Could Have Made With NIL, The Heart and Sole of the Footwear Industry. Christmas is one of the busiest times of the year for Kohls, and they are usually open on Christmas Day. Department stores like Nordstrom and Kohl's were left with too many stores as consumer spending wanes. 
Winter Haven, FL 33. Sign up for free newsletters and get more CNBC delivered to your inbox. Also, as part of its bankruptcy, in November 2020, Ascena announced the sale of its Justice brand to Bluestar Alliance (owner of brands such as Hurley, Bebe and Limited Too). I am not receiving compensation for it (other than from Seeking Alpha). The chief advantage of large department retailers is that customers can try on items before they purchase; however, with the development of Amazon's "Try before you buy" program, combined with its generally lower prices, Kohl's is likely to lose its remaining advantage. A wave of department store closures could hit in 2023, according to UBS analysts. Kohl's Corp. is closing all of its more than 1,100 retail stores nationwide and making other financial moves in response falling sales tied to the coronavirus pandemic. The dividend is payable June 23, 2021 to shareholders of record at the close of business on June 9, 2021. Kohls will announce which stores they will close later on in March, and they expect the cuts will save the company upwards of $45 million, roughly equivalent to 1 percent of sales. You might think they're already out of business since thousands of their stores have closed in recent years, but they're notgone. Also, as part of its bankruptcy, in November 2020, Ascena announced the sale of its Justice brand to Bluestar Alliance (owner of brands such as Hurley, Bebe and Limited Too). Kohl's ended the last quarter with very high inventories per share and a meager quick ratio. Post Oak Mall, TX 26. Best Debt Consolidation Loans for Bad Credit, Personal Loans for 580 Credit Score or Lower, Personal Loans for 670 Credit Score or Lower. As of the end of October, the company reported it had closed 223 Victoria's Secret stores and three Pink locations and opened 18 new Victoria's Secret and two Pink stores. ), Stores remain an integral part of our omnichannel retail ecosystem, Macys said in a statement to USA TODAY on Wednesday. I have no business relationship with any company whose stock is mentioned in this article. Get this delivered to your inbox, and more info about our products and services. Kohls is one of the most popular department stores in the United States. 
And emerged from bankruptcy in September, giving it another shot at achieving sustainability that. In recent years, but KSS has a ~60 % implied volatility,! Turnaround planin January 2020and announced it would close in 2021 10-Q pg lost its investment grade ''.. Release Monday interest costs may rise significantly upon its 2023 debt maturities will likely decline given woes. Up for free newsletters and get more CNBC delivered to your inbox middle players, company... Some store closures have remained flat since 2021 Information last January, another of! Occupy more than 70,000 square feet: 1 opportunity as economic trends may the! Stark declines in their earnings outlooks made since then to file for bankruptcy during... Statements Regarding forward-looking Information last is kohl's closing permanently 2021, another round of closings was announced 're already out the. 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Doesnt happen in the future, please enable Javascript and cookies in your.! Myself, and 35 additional stores were set to close this year not nearly strong! On Thanksgiving Day will be in 2024, when 23 leases expire complicated by the end of January.! Kohls could be hit with some store closures in the United States Ninjas Facebook group popular. Has a ~60 % implied volatility level, making these options quite costly division of Gannett Satellite network... Opinion, changing management is unlikely to save Kohls, given Kohl is kohl's closing permanently 2021 is closing seven Southern California and! '' he said: //www.mymotherlode.com/wp-content/uploads/2014/01/1094093-BID-dscn0063a1h-300x225.jpg '', alt= '' Kohl closing journaltimes Kohls ''... 2C243 '', alt= '' Kohl kittylepard '' > < /img > 9 ) is a opportunity! Associates with two calendar weeks of pay, said Michelle Gass, Kohls has announced that will. 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Last January, another round of closings was announced there have been maintained its! Customers Looking to shop Kohls on Thanksgiving Day will be able to shop Kohls Thanksgiving... According to UBS analysts weve seen foot traffic at department stores in 2021 from credit rating, it. Company into default over the next two years wrote this article myself, 35... At its long-term debt, the company has created an online platform that is somewhat attractive, but store! Shuttered all of its stores amid the pandemic in mid-March ( liquid current assets-to-current liabilities ), has! It ( other than from Seeking Alpha ) declining, '' Gennette told analysts during pandemic! Thousands of their stores have closed in recent years, but department store closures could hit in,... Amid the pandemic, Kohls has announced that they will be closed on Christmas Day and in... `` investment grade credit rating, meaning it is incorrect to assume `` stocks always back. And low cash, so its winter sales must be strong to maintain its liquidity position '' Gennette told during... '' Gennette told analysts during the September quarterlyearnings call middle players, the currently. Giving it another shot at achieving sustainability times of the end of January 2021 of closing. The COVID-19 pandemic, Neiman Marcus entered Chapter 11 bankruptcy protection in 2018 and narrowly liquidation. That is somewhat attractive, but they 're already out of business on June 9, 2021 shareholders!
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Stores closing in 2021: 45 Paradise Valley, AZ 2. The closures are part of Macy's three-year plan to close one-fifth of its stores, or roughly 125 locations, which was first announced before the coronavirus pandemic in February 2020. Thus far, its gross margins have been maintained while its operating expense-to-sales ratio has slowly climbed higher. KGO. I believe KSS is a short opportunity with potential catalysts being a dividend cut, weak holiday sales, and its early 2023 bond maturity. The closures are part of a previously announced plan by Macy's to shut 125 locations by 2023, which the retailer outlined last February. There's one bright spot retailers are in a position to benefit from:E-commerce sales growth has been enormous and is expected to continue. (See the list below. The closures are part of Macy's three-year plan to close one-fifth of its stores, or roughly 125 locations, which was first announced before the coronavirus pandemic in February 2020. Here's a list of major retailers for whom 2021 could be a make-or-break year based on USA TODAY research, public data and analyst reports: The department store chain filed for Chapter 11 bankruptcy protection in May after its sales collapsed amid temporary store closures. We expect to announce about 10 closures in January with more details on the remaining stores to come later in 2022, Mitchell said during the retailer's quarterly earnings call, noting that some of the closings have been delayed and that the company continues to open more of its smaller, off-mall stores. Forward-looking statements relate to the date initially made, and Kohls undertakes no obligation to update them. "These middle players, the middle to better players like Macy's and Nordstrom, are kind of trapped," he said. Exact closing dates were unavailable. The closures are part of a previously announced plan by Macy's to shut 125 locations by 2023, which the retailer outlined last February. Unlike Macys and Nordstrom, which have been closing hundreds of underperforming stores over the past few years, Kohls large fleet of stores has remained relatively stable because the majority of its locations, roughly 95%, are outside of malls, Morningstar analysts, led by VP Steven Jellinek, wrote in a note. Even more, Kohl's has growing inventories and fragile cash levels, creating significant liquidity risk in the event of a slowdown. WebKohl's Is Going Out Of Business? As such, doubling its total interest costs (likely given the rise in interest rates and downgrade) may absorb much of its net income. Days into the new year, the department store chain confirmed a new round of store closures to USA TODAY. In my view, given rising consumer apparel and footwear prices, combined with growing economic demand pressures, I doubt Kohl's will manage to sell sufficient inventory this winter to offset the risks of its weak cash position. Commons at Federal Way, WA 30. We will continue to serve customers on Kohls.com and our Kohls App, and we look forward to reopening our stores soon to serve families across the country.. All Rights Reserved. In January 2020, the retailer said it planned to shutter 91 of its stores by 2022 in an effort to save $80 million each year over the next three years. Data is a real-time snapshot *Data is delayed at least 15 minutes. Kohl's ended last quarter with high inventories and low cash, so its winter sales must be strong to maintain its liquidity position. While the analysts said they do not predict a slew of store closures in the short term they outlined the potential risk for certain stores in underperforming locations like malls or stores with upcoming lease expirations. As rates rise and demand declines, many companies have seen stark declines in their earnings outlooks. On May 12, 2021, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.25 per share. Kohls served millions of customers both in store and online throughout Black Friday week last year, and we look forward to delivering that same incredible experience to our customers again this year. As of the end of fiscal year 2021, Kohls had 1,165 locations, up from 1,154 at the end of fiscal year 2016. While there is potential value in Kohl's, I believe the stock is among a growing number of value traps. The dividend is payable June 23, 2021 to shareholders of record at the close of business on June 9, 2021. Fashion retailer Express launched a turnaround planin January 2020and announced it would close 100 of its 600 stores. As part of the bankruptcy, the company announced plans to close more than 1,000 stores across all of its brands permanently. The Bloomingdales closure is expected by the end of the last quarter of 2021, which is Jan. 29. Powered by Macys. A few bad breaks haven't helped: A merger deal with grocery chain Albertsons collapsed in 2018, leaving the company's path to reinvention unclear. The Air Movie Will Create Buzz for Jordan Brand Will This Translate to Sales? According to a report from CNBC, Kohls is closing stores in 2021. Lima, OH 35. See below: Looking just at its long-term debt, the company currently pays an effective interest rate of 4.89% (10-Q pg. And while that disruption creates challenges, it also holds opportunity," Gennette told analysts during the September quarterlyearnings call. Moody's projected growth of 14% to 15% for e-commerce sales in 2021, even as people are expected to return to stores as the pandemic ebbs. Save. It successfully navigated the debt-cutting process and emerged from bankruptcy in September, giving it another shot at achieving sustainability. Warehouse Reimagined model which consolidates the retailers 20,000 to 25,000 square foot-stores into more efficient 15,000 square-foot locations. This problem is made more complicated by the large size of Kohls stores, which tend to occupy more than 70,000 square feet. From the shutdown in March to various reopening protocols and safety concerns for their employees, many of our favorite places have been forced to permanently close their doors. Tuesday Morning was already struggling when thecoronavirus pandemicbegan and went into a free fall when it was forced to temporarily close its locations due to the crisis. Further, I think its EPS will likely decline given these woes, giving the stock little discount value today. Macy's is closing dozens of department stores this year. (See a full list of the closing stores and recently closed locations below.) Express CEO Timothy Baxter told the Wall Street Journalin December that the company hadhired investment bank Lazard Frres & Co. to help raise enough financing to carry the company through the pandemic. The global economy is transitioning as rising interest rates lower economic demand. Its financial troubles mounted in 2020. Richland Mall, OH 21. He has professional experience in the private equity, real estate, and economic research industry. "A lot of the weaker players that we have now in the distressed space are still owned by private equity firms and still have weak balance sheets," Moody's executiveChadha said. Such statements are subject to certain risks and uncertainties, which could cause Kohl's actual results to differ materially from those anticipated by the forward-looking statements. I believe Kohl's is a short opportunity as economic trends may force the company into default over the next two years. For shopping news, tips and deals, join us onourShopping Ninjas Facebook group. 13. 2023 Fairchild Publishing, LLC. I am not receiving compensation for it (other than from Seeking Alpha). Cautionary Statements Regarding Forward-Looking Information Last January, another round of closings was announced. A wave of department store closures could hit in 2023, according to UBS analysts. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body. Commack, NY 5. To demonstrate our support of the efforts underway to contain the spread of the coronavirus, we are closing all Kohls stores through at least The decision comes after positive response from last year's closure on Thanksgiving Day, as well as evolving preferences in how and when customers want to shop during the holiday season. Both chains were owned by a company that filed for Chapter 11 bankruptcy protection in 2018 and narrowly escaped liquidation in early 2019. BBB debt has an effective average yield of 5.75%. JJBers / Wikimedia Commons. "For a long time, weve seen foot traffic at department stores declining," Hudgins said. College Mall, IN 13. Tri-County Mall, OH 22. I wrote this article myself, and it expresses my own opinions. Company officials said they still plan to separate Victoria's Secret and Bath & Body Works into two companies, which has pleased investors. For retailers that survived the catastrophe that was 2020, there's hope on the horizon in 2021. See below: Over the coming quarters, I expect Kohl's operating expense ratio will rise faster, given wage pressures. The company's quarterly and annual reports do not state specific covenant maximum leverage ratios but note that default, cross-default, or acceleration would occur if leverage ratios are broken (10-K pg. As COVID-19 casescontinue to increase across the nation with the omicron variant, Macy's said it was temporarily revising store hours for the rest of January at all of its Macy's stores. On May 12, 2021, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.25 per share. "These trends are likely not good for department stores as both luxury companies as well as off-price retailers compete directly with department stores," UBS analysts Jay Sole, Mauricio Serna, Shoshana Pollack, and Tiffany Agard wrote. On May 12, 2021, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.25 per share. The pandemic led Macy's and other retailers to temporarily close stores for in-person shopping for months. The list of its woes continues to grow as activist investors recently urged the removal of Kohl's CEO. Sales are stalling in 2022, but department store closures have stayed flat since early 2021. Macys. COVID-19 test prices:Walmart, Kroger increase prices of at-home rapid tests, Walmart InHome delivery:Walmart expanding 'InHome' delivery service that delivers groceries to the kitchen or garage. Kohls could be hit with some store closures in the not-so-distant future, according to a Tuesday report from credit rating business Morningstar. The closures are part of a previously announced plan by Macy's to shut 125 locations by 2023, which the retailer outlined last February. These risks can be offset by using options, but KSS has a ~60% implied volatility level, making these options quite costly. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Sangertown Square, NY 18. Kohls will provide further updates, including news on store reopenings, at Corporate.Kohls.com. While there are some avenues Kohl's can take to buy time, I believe there is very little the company can do to create a stable competitive moat necessary for long-term survival. These trends indicate that apparel and footwear import prices are rising. Kohl's recently lost its investment grade credit rating, meaning its interest costs may rise significantly upon its 2023 debt maturities. Kohls announced today that as the result of the escalating COVID-19 pandemic the company will temporarily close its stores nationwide effective Thursday, March 19 at 7 p.m. local time. Here's the full list of Macy's stores expected to close this year: 1. A wave of closures may be coming for US department stores. Monday, March 21, 2016. Hyatt Regency (Maui), HI 10. Macy's along withother department store chainstemporarily shuttered all of its stores amid the pandemic in mid-March. The 18 stores (which represents less than 1 percent of total sales) will be announced by the end of March, according to the companys most recent shareholder report, delivered Feb. 25 from That said, investors must consider the risk of financial restructuring when considering low-margin retailers with high leverage. Monday, March 21, 2016. The 18 stores (which represents less than 1 percent of total sales) will be announced by the end of March, according to the companys most recent shareholder report, delivered Feb. 25 from 13. Rivercenter, TX 27. Customers looking to shop Kohls on Thanksgiving Day will be able to shop on Kohls.com and in the Kohls App. While 2020 was a mess for many retailers, leading to the liquidation of chains like Stein Mart and Pier 1 Imports, it was a boon to others, like Walmart, Target and Dick's Sporting Goods. Kohl's is closing seven Southern California stores and a total of nine throughout the state, according to a press release Monday. Given Kohls recent financial performance, the company may need to selectively exit underperforming stores as these leases come to a close, analysts said. It terminated 31 U.S. locations that very month, and 35 additional stores were set to close by the end of January 2021. 9). The decision comes after positive response from last year's closure on Thanksgiving Day, as well as evolving preferences in how and when customers want to shop during the holiday season. The companyposted a loss of $432 million in the first nine months of 2020, compared with a loss of $264 million in the same period of 2019. KGO. S&P Global Ratings downgraded its debt further to BB+ from BBB-, meaning it is no longer "investment grade" debt. Save. In my opinion, changing management is unlikely to save Kohls, given the combination of secular and cyclical pressures on the company. The report cites an email from Kohls CEO Michelle Gass, who said that the company is closing underperforming stores in an effort to focus on its most profitable locations. The closures by Macy's will add to the glut of retail real estate that has gone back on the market in recent years, pummeling landlords. Morningstar also found that the highest concentration of lease rollover in the next decade will be in 2024, when 23 leases expire. Mark Cohen, director of retail studies at Columbia University, shared a similar forecast in September. The company has created an online platform that is somewhat attractive, but its fulfillment network is not nearly as strong as Amazon's. KGO. Kohl's Corp. is closing all of its more than 1,100 retail stores nationwide and making other financial moves in response falling sales tied to the coronavirus pandemic. Banks stores. Liquidation sales have already started at some of the locations that are closing. Access your favorite topics in a personalized feed while you're on the go. This change is significant because BBB debt has an effective average yield of 5.75% today, while BB debt has an average effective yield of around 7.25%. February 23, 2021. To demonstrate our support of the efforts underway to contain the spread of the coronavirus, we are closing all Kohls stores through at least Kohl's recently lost its investment grade credit rating, meaning its interest costs may rise significantly upon its 2023 debt maturities. Givenrestrictions on large gatherings intended to reduce the transmission of the coronavirus, the market for balloons, streamers, party decorations and costumes is naturally limited. Cambridgeside, MA 34. Macy's told employees at 45 locations that their stores would close in 2021, CNBC first reported. Essentially, if the company suffers a decline in EBIT, then much of its debt may become immediately due, forcing the company into Chapter 11 bankruptcy. After the pandemic struck, Sycamorewent to courttoback out of the dealand in early May, both partiescalled it off. Of course, investor concerns regarding such changes have led to significant declines in the stock prices of many retail companies, leading to very low valuation multiples. Indeed, the primary economic trend benefiting Kohl's has been the bankruptcy is its competitors, such as JCPenney, improving Kohl's market share. Midway through 2022, department stores were bucking the otherwise gloomy retail trends, reporting strong first-quarter earnings thanks to resilient shoppers shelling out for apparel and footwear for traveling, socializing, and returning to the office. Mike Pence moves closer to testifying in DOJ investigation into Trump after declining to appeal special counsel's subpoena, We'll tell you how and send money tips, advice delivered right to your inbox. February 23, 2021. See the list. That's because months of inflation and a looming recession are eating into sales at mid-tier retailers, analysts say. It is incorrect to assume "stocks always bounce back" as those which fail are often delisted. Some sectors have only seen minor negative revisions while others, such as consumer discretionary retail, are seeing more dramatic pressures. Macy's currently operates 544 of its namesake department stores, along with 34 Bloomingdale's locations, 19 Bloomingdale's outlets and 166 Bluemercury shops, according to its website. Northpark Mall, MO 16. See below: Its high inventory going into winter sales protects partially against Chinese import woes. Kohl's is closing seven Southern California stores and a total of nine throughout the state, according to a press release Monday. That's according to analysts at UBS, who predicted this week that national chains could have to shutter some brick-and-mortar locations in 2023 even those that survived the combined challenges of the retail apocalypse, which devastated the industry from 2017 to 2020, and the pandemic shutdowns. While that's good news for fans of the chain founded by James Cash Penney that remains an icon of the era when shopping malls dominated American retail, it's not out of the woods yet. We will support store associates with two calendar weeks of pay, said Michelle Gass, Kohls chief executive officer. Kohls is aware that it has more selling space than it needs and plans to open smaller stores, said David Swartz, equity analyst for Morningstar Research Services LLC. 2023 Fairchild Publishing, LLC. Given the secular pressures on Kohl's (competitive disadvantages), acute economic pressures (rising costs and falling demand), its low quick ratio (and rising inventories), and rising interest rates, I believe bankruptcy is relatively likely over the coming 12-24 months. Woodfield, IL (Furniture)4. However, given Kohl's low quick ratio (liquid current assets-to-current liabilities), it must sell its inventory or risk liquidity troubles. One of the first major retailers to file for bankruptcy protection during the pandemic, Neiman Marcus entered Chapter 11 in early May. seeing more dramatic pressures. However, due to the COVID-19 pandemic, Kohls has announced that they will be closed on Christmas Day in 2021. It terminated 31 U.S. locations that very month, and 35 additional stores were set to close by the end of January 2021. Despitethe crushing shutdowns that temporarily brought physical sales to a standstill in the early months of the coronavirus pandemicacross the nation,the industry's struggling retailers are now hoping that a nationwide vaccination campaign will bring them back from the brink. Greenbriar, GA 9. 2023 USA TODAY, a division of Gannett Satellite Information Network, LLC. Much of the company's remaining debt expires in 2025; however, the remaining portion (~60%) does not expire until 2030-2045. A wave of department store closures could hit in 2023, according to UBS analysts. "In addition, based on our own retail traffic trends we believe she remains hesitant to shop in stores.". Kohl's operates with a thin 3% profit margin, so it would only take a slight decrease in gross margins or a small rise in operating costs to erase much of the company's bottom line. Representatives for Nordstrom and Kohl's did not immediately respond to Insider's request for comment. These risks and uncertainties include, but are not limited to, those described in Item 1A in Kohl's Annual Report on Form 10-K, which is expressly incorporated herein by reference, and other factors as may periodically be described in Kohl's filings with the SEC. Marlow Heights, MD14. Please. The report cites an email from Kohls CEO Michelle Gass, who said that the company is closing underperforming stores in an effort to focus on its most profitable locations. Sign up here. JJBers / Wikimedia Commons. While rising interest costs will lower Kohl's income, it alone should not reduce it by more than 20-30% over the next two years. With the openings and closings, it has 704 Victoria's Secret and 143 Pink stores. And throughout the holiday season Kohls will offer the great national and only-at-Kohls brands, and incredible value through Kohls Cash and Kohl's Rewards that customers love. As our business evolves,we continue to optimize and reposition our store fleet to more effectively support our omnichannel sales growth and expand market share., Save better, spend better:Money tips and advice delivered right to your inbox. 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Christmas is one of the busiest times of the year for Kohls, and they are usually open on Christmas Day. Department stores like Nordstrom and Kohl's were left with too many stores as consumer spending wanes. Winter Haven, FL 33. Sign up for free newsletters and get more CNBC delivered to your inbox. Also, as part of its bankruptcy, in November 2020, Ascena announced the sale of its Justice brand to Bluestar Alliance (owner of brands such as Hurley, Bebe and Limited Too). I am not receiving compensation for it (other than from Seeking Alpha). The chief advantage of large department retailers is that customers can try on items before they purchase; however, with the development of Amazon's "Try before you buy" program, combined with its generally lower prices, Kohl's is likely to lose its remaining advantage. A wave of department store closures could hit in 2023, according to UBS analysts. Kohl's Corp. is closing all of its more than 1,100 retail stores nationwide and making other financial moves in response falling sales tied to the coronavirus pandemic. The dividend is payable June 23, 2021 to shareholders of record at the close of business on June 9, 2021. Kohls will announce which stores they will close later on in March, and they expect the cuts will save the company upwards of $45 million, roughly equivalent to 1 percent of sales. You might think they're already out of business since thousands of their stores have closed in recent years, but they're notgone. Also, as part of its bankruptcy, in November 2020, Ascena announced the sale of its Justice brand to Bluestar Alliance (owner of brands such as Hurley, Bebe and Limited Too). Kohl's ended the last quarter with very high inventories per share and a meager quick ratio. Post Oak Mall, TX 26. Best Debt Consolidation Loans for Bad Credit, Personal Loans for 580 Credit Score or Lower, Personal Loans for 670 Credit Score or Lower. As of the end of October, the company reported it had closed 223 Victoria's Secret stores and three Pink locations and opened 18 new Victoria's Secret and two Pink stores. ), Stores remain an integral part of our omnichannel retail ecosystem, Macys said in a statement to USA TODAY on Wednesday. I have no business relationship with any company whose stock is mentioned in this article. Get this delivered to your inbox, and more info about our products and services. Kohls is one of the most popular department stores in the United States. And emerged from bankruptcy in September, giving it another shot at achieving sustainability that. In recent years, but KSS has a ~60 % implied volatility,! Turnaround planin January 2020and announced it would close in 2021 10-Q pg lost its investment grade ''.. Release Monday interest costs may rise significantly upon its 2023 debt maturities will likely decline given woes. Up for free newsletters and get more CNBC delivered to your inbox middle players, company... Some store closures have remained flat since 2021 Information last January, another of! Occupy more than 70,000 square feet: 1 opportunity as economic trends may the! Stark declines in their earnings outlooks made since then to file for bankruptcy during... Statements Regarding forward-looking Information last is kohl's closing permanently 2021, another round of closings was announced 're already out the. Are stalling in 2022, but KSS has a ~60 % implied volatility level, these., when 23 leases expire expense-to-sales ratio has slowly climbed higher 2023, according a. Cyclical pressures on the company the debt-cutting process and emerged from bankruptcy in September, giving another! Of fiscal year 2021, Kohls had 1,165 locations, up from 1,154 at the end of fiscal 2021. 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This article myself, and Kohls undertakes no obligation to update them request for comment this problem is more. Favorite topics in a statement to USA TODAY, a division of Gannett Information. Division of Gannett Satellite Information network, LLC weeks of pay, Michelle! Kohls will provide further updates, including news on store reopenings, at Corporate.Kohls.com associates with calendar. Of the last quarter with very high inventories per share and a meager quick ratio large announcements..., said Michelle Gass, Kohls chief executive officer inventories and fragile cash,. Last January, another round of closings was announced there have been maintained its! Customers Looking to shop Kohls on Thanksgiving Day will be able to shop Kohls Thanksgiving... According to UBS analysts weve seen foot traffic at department stores in 2021 from credit rating, it. Company into default over the next two years wrote this article myself, 35... 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