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 [KSS] 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 during the earnings call, Buchanan blamed his customers. He said 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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Has there ever been a business that shrank itself to success? I’d hate to see these guys fail although I never shop there. Their pricing strategy is a total mystery.
Shrinking your way out of trouble is not easy. There is a long list of businesses that shrank their way into bankruptcy court.
Instead of blowing more cash on share buybacks, as it announced today, Kohl’s should invest every penny it can get into its ecommerce operations so it might have at least a viable business.
Getting ecommerce right isn’t always easy. I doubt if companies like Kohl can catch up on ecommerce now.
Perhaps best for them to buyback than re-invest the money in a dying business. But your point about missing the chance when they had one is valid.
I see several disconnects between what investors want and what will help the business long term. There is no dearth of Jack Welch’s in America who enrich shareholders while the business catching terminal illness.
Take a look at the Southwest vs activist investor fight right now. Eventually Southwest gives into pressures and removes the one thing that most of its loyal customers care about :)
Let us see how the corporate history of LUV unfolds from here.
I was wondering at first if Kohl’s was run by private equity. PE is the 1/2 of the guaranteed death-nail for a business. But alas, it was the other 1/2 death-nail of share buyback stupidity. Thanks for the information.
I do think there’s some truth in what the CEO said between the 50k and 100k. The problem is for them, there’s way more truth in what you said.
The unconstrained consumer purchases $120k Cyber trucks.
Howdy Curiouscat. The Kohls pricing strategy might be or used to be Kohls Cash Rewards. I would sometimes have to listen to my wife and daughters in law talk about the Kohls Cash Incentives offered by mail, email….. I was trapped in a vehicle with them and had no place to hide……
Exactly Bubba, what Kohl’s needs is more women to go shopping in their stores! Give them CASH and a car!
So buy the dip then? Only took 10 years for this opportunity to arrive. Still to be fair to Kohl, at least in this pantheon of imploded stock it took way longer than Beyond Meat 93% fall from grace in 5 years..
Dude, that’s a never buy. Lol
Great data and article.
Consumer perspective:
I spend a fricken ton a year on crap I don’t want, need or particularly care for. So unbiased perspective on Kohls.
It’s cheap stuff and I’m like meh. Although the shipping experience is nice, with lots of parking and large stores. Feels like an old Macys lite. The kohls cash thing was fun to play with back in about 2012. I think maybe they do not stock enough brands that draw in a consumer who will spend $100-200 a trip. At Christmas I saw a bunch of older women returning a bunch of things. So, not much to buy and kind of expensive for the cheap crap they do have on hand.
👍
My wife used to love the 30% off coupons from Kohl’s. It took average prices and made them cheap. Now she gets 10% off coupons on wildly overpriced clothing. Found the Temu app and found out that you could buy the exact same low-quality clothing for 10% of Kohl’s price.
Kohl out to show a target if store closings that will save the ship
Thanks for the heads up. I’ll look for a going-out-of-business sale. I need a new couch at a fraction of the cost.
Mr. Wolf – Retail is cratering everywhere. There is NO WAY that this is all due to e-commerce. I read that there is ONE thriving mall left in your lovely hometown of San Francisco. Women love to shop – and much of it is the browsing, the social aspect, the walking, the availability of multiple stores all in one place, including restaurants. But more than anything, they love to spend money on themselves. Teens also love malls and department stores. Sure, e-commerce takes some business away from brick ‘n mortar stores, but to blame the demise of brick and mortar stores on e-commerce is like saying ICE vehicle sales are dead due to EV sales taking over. There’s much more to the story.
Bobby M,
“Retail is cratering everywhere.”
Brick and mortar retail sales at indoor malls are dying — that’s been going on for years. Big indoor malls have been dying in large numbers, and they will vanish as malls, they have huge parking lots and easy-to-tear-down buildings that can be redeveloped into housing, etc. That’s already happening on a large scale, including in San Francisco. Ecommerce is booming. Grocery stores, auto dealers, and gas stations are doing OK. Restaurants have been growing their sales at a sharp rate. Strip malls anchored by grocery stores are doing well. Overall retail sales have been growing sharply.
So the first chart shows department store sales (same as in the article), the second shows total retail sales (not in the article), so you can see them together, both of them quarterly:
Pretty much every year for the past 20 years I have bougth more and more stuff online (and less and less stuff at traditional retail outlets). I can’t think of a single person that won’t say the same thing (even my parents in their 90’s now buy almost everything but groceries online). In the apartment business for the last 20 years the number of packages left at apartment doors has been increasing every single year. I don’t see Kohl’s turning things around and I think we will lose a LOT more traditional retailers on the next decade. P.S. With more and more things getting locked up at traditional retailers more and more people are like me and don’t care if they have to pay more online since they don’t have a half an hour to wait around for someone to find the the employee who has the key to the spray paint cage at Home Depot or Walmart…
I prefer to buy stuff in brick and mortar stores especially shoes and clothing, but as Wolf pointed out online shopping continues to have more and more options and styles. However those of us who like fresh produce, breads and meat, we will never shop online for perishable goods. Furthermore, if your missing milk or some ingredients for a recipe, waiting for next day delivery isn’t an option. So grocery stores will never go away, but may shrink in size. I also think hardware stores like Lowes and Home Depot can’t be replaced by online shopping because projects can’t stop to wait for a box of screws or some part.
@Nicholas Rains I’m not a big “fashion” guy and buy most clothes and shoes to replace clothes and shoes that have worn out. Once I have something that fits I just buy the same size again (as easy as clicking buy it again on Amazon). We have a meal kit company that sends us a box with fresh food on ice once a week with three diners and we just go to the grocery store twice a month and make once a month trips to Costco and Trader Joes. Almost anyting that will fit in a Home Depot shopping bag is now cheaper on Amazon (even if you don’t have the Amazon card that gives you 5% cash back).
Nicholas Rains,
“those of us who like fresh produce, breads and meat, we will never shop online for perishable goods.”
We now buy vegetables at an online-only Asian-food store in the Bay Area. They’re local, they’re getting their stuff straight from the Central Valley, they deliver the next day mostly with their own staff drivers, it’s fresher than at the store, and they have lots of produce that stores don’t carry. And their stuff costs less.
We also buy frozen fish there because we can get fish that we cannot get at a store, a large variety of delicious fish that you will never find at a Safeway or Whole Foods. And it’s a good deal too.
We tried that store once and were hooked! That’s how it goes with lots of ecommerce stuff. You try it once and are hooked by what you can get, by the ease of it, by the price, by the convenience.
We’re now also buying lots of our bulk food online, such as different kinds of beans, rice (Japanese-style California-grown rice, Basmati rice, and jasmine rice), quinoa, etc. Save lots of money. And it’s good stuff.
We’re shifting more and more grocery purchases to ecommerce.
It’s possible in places like California where farm to table is convenient and companies must meet the same standards as farmer’s markets. However those who live in the sticks have few options. I moved to Angel Fire, NM from the Bay Area, I order bulk groceries from Sam’s Club with free shipping, but produce and meat is an issue. I drive 45 minutes to Taos to Albertsons once every week or two because our local grocery store’s produce is terrible. I’m not sure what life in Albuquerque or Santa Fe is like, but the feasibility of successful grocery e commerce is driven by market size, median income and availability of products.
Can local small online businesses win over control freak corporations? We can only hope.
I use instacart to buy non-perishable stuff from Walmart, and to buy fruit, vegetables, and meat from Sprouts. I have a 5% cash back card, but they charge a fee. It nets out costing about a dollar or two per order. Delivery is usually within a couple of hours. I use another service that delivers medications for free the next day, I hate Walgreens. Everything else I get from Amazon with a 5% cash back card. Generally Amazon is next day delivery, but some stuff is same day delivery. I do video appointments with my doctor. I never liked going to stores, so all this e-commerce and delivery is great. Saves a lot of wear and tear on my car, no transportation costs, and no more wasted time shopping. I’ve got getter things to do with my time,
I’ve got better things to do with my time. This site could use an edit option.
No! not going to happen. Even the site owner lives with his mistakes. The rest of us can, two….
Khols actually does ecommerce too. Buy online or buy online and store pickup. Ironically they have more selection of sizes, colors, etc. online than in stores.
But they’re hurting themselves. Website needs work. Shipping is only free on $50+ orders. Inventory management is poor. There’s a store one mile from my house, but frequently out of what I need. All seemingly fixable issues nobody has fixed.
Ah, Kohl’s—a once-prominent retailer now teetering on the precipice of obsolescence. Their recent 24% stock plunge, reaching lows unseen since 1997, is a testament to their failure to adapt to the digital age. While e-commerce flourishes with a 9.3% year-over-year growth, Kohl’s clings to its antiquated brick-and-mortar model, hemorrhaging customers to more agile online competitors. Blaming “constrained” consumers is a convenient deflection; the truth is, Kohl’s has been outmaneuvered in a game it refused to acknowledge.