Energy News Beat
The stock plunged 24% today to lowest since 1997, down 89% from peak, and has joined our Imploded Stocks.
By Wolf Richter for WOLF STREET.
Shares of department store Kohl’s plunged 24% today to $9.19, the lowest price since August 1997. But that 24% plunge today is barely visible in a 10-year chart. The stock has collapsed by 89% from its all-time high in September 2018, and has been inducted into our pantheon of Imploded Stocks.
The beating that Kohl’s shares took today came after the company reported that total revenue in Q4 fell by 9.4% year-over-year, and by 7.3% for the whole year, the third year in a row of annual revenue declines, to $16.2 billion, a tad above the lockdown low in 2020, and beyond that the lowest in many years.
In the three years before 2020, annual revenues had stagnated at $20 billion. Since 2018, revenues have dropped by 20%. For the current fiscal year, the company today projected another revenue decline of 5-6%, which would bring the decline since 2018 to 25% (data via YCharts):
Net income in Q4 collapsed by 74% to just $48 million. Net income for the whole year collapsed by 66% to just $109 million. Compared to 2017 ($859 million), annual net income has collapsed by 87%.
And all these failing department stores, those that are still around, are blaming their customers, that they’re tapped out or whatever, obviously, not themselves for having failed to switch their business to ecommerce a decade ago, and not ecommerce, which has been eating their lunch for over 25 years.
Department stores are particularly targeted by ecommerce because you can buy anything online that department stores sell at their stores, but a lot more, the whole panoply of products, styles, sizes, and colors, not just a selection, and they bring it to your house, and often for less.
Since the peak in 2000, over those 24 years, department store sales have collapsed by 43%. There is no recovery for brick-and-mortar department stores. As Americans changed how they shop, the business model of brick-and-mortar department stores collapsed under the weight of ecommerce.
But ecommerce is booming, and consumers are holding up just fine: in Q4, while Kohl’s sales dropped 9.4% year-over-year, ecommerce sales jumped by 9.3% year-over-year.
Kohl’s replaced the CEO earlier this year, and the new guy, Ashley Buchanan, quickly announced additional store closings for 2025.
Today, Buchanan blamed his customers. He that customers earning less than $50,000 a year are “pretty constrained from a discretionary standpoint,” and for those earning less than $100,000, “it’s also pretty challenging, and you see that very clearly in the numbers,” he said.
Which was funny, because ecommerce sales are booming, they’re up 9.3% year-over-year, and Kohl’s problem is that its customers are buying online from other retailers, such as Amazon, or Walmart, or Macy’s or Nordstrom, or any of the Chinese outfits that are now selling directly in the US.
Kohl’s new guy is blaming “constrained” customers when in fact they’re buying from the online competition, and Kohl’s is just losing them.
All surviving department stores have ecommerce sites, and online sales growth, if any, partially covers up the demise of their physical stores.
They all have been shutting physical stores for years, and that continues in 2025. Each time a store closes, the nearby stores get to pick up some of the left-over business from the closed store, softening the blow of ecommerce on the survivors, and the rest of that business from the closed store walks off to the internet.
Thousands of stores have closed since 2016, which is when I started calling this relentless process the Brick-and-Mortar Meltdown. Local department stores and regional department store chains are all gone by now. The national chains are down to just a handful, all of them troubled, including J.C. Penney, which was bought out of bankruptcy by the #1 and #2 largest mall landlords fearing for their malls, when the anchor stores close.
Walmart, which is not a department store but a general merchandise retailer, figured this out years ago and spent billions of dollars, including on acquisitions of now scuttled ecommerce retailers, to build a huge ecommerce business that is growing at 20-30% a year. In addition, it focused on groceries and became the largest grocer in the US, because Americans largely still like to buy groceries at the store, though that’s changing too. The rest of Walmart’s retail business is suffering from the brick-and-mortar meltdown too.
Buchanan had been one of the leaders at Walmart’s booming ecommerce business in 2019 and 2020 and knows what’s up: An effort to boost the ecommerce business and closing more brick-and-mortar stores – that’s the only long-term survival strategy there is for department stores.
But it’s a bitter pill to swallow for investors, so it’s better not to explain that to them. And it’s better to dish up some stuff about “constrained” consumers.
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The post Kohl’s Spirals into Brick-and-Mortar Meltdown, Blames “Constrained” Consumers, but it’s Just Losing them to Ecommerce, which is Booming appeared first on Energy News Beat.
