November 20, 2013, 12:11 PM

Kohl’s reports a 15% web sales increase for the third quarter

Growth rate slows because of its new e-commerce platform rollout, CEO Mansell says.

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Kohl’s Inc. had lower than usual e-commerce sales growth in the third quarter, while comparable-store sales declined.

For the quarter ended Nov. 2, Kohl’s, No. 26 in the 2013 Internet Retailer Top 500, reported:

  • Web sales increased by 15%, CEO Kevin Mansell told Wall Street analysts on the retail chain’s earnings call last week. Kohl’s didn’t break out online sales in dollars for the quarter but based on the $295 million in third quarter web sales reported last year, Q3 2013 web sales totaled about $339.3 million.
  • Total sales of $4.44 billion, a decrease of about 1.1% from $4.49 billion in the third quarter of 2012.
  • Comparable-store sales declined 1.6%.
  • Net income was $177 million, a 17.7% decrease from $215 million in the third quarter of 2012.

The web represented 7.6% of total sales for the quarter, compared with 6.6% in the same quarter last year.

The 15% online sales growth rate for Q3 was “lower than our historical growth rate but is generally consistent with our expectations, given our re-platform this quarter,” Mansell told analysts, according to a transcript of the call from Seeking Alpha. “We fully expect e-commerce sales to reaccelerate in the fourth quarter now that the re-platform has been completed.”

Mansell noted on the company’s second quarter earnings call that the transition to a new Oracle Corp. e-commerce platform had been completed. Kohl’s did not respond to a request for comment on how the new technology affected Q3 web sales. Kohl’s previously had reported plans to switch to Oracle from RedPrairie technology from JDA Software Group Inc.

Kohl’s expects its e-commerce profitability, which is in the “mid-single digit operating range,” to improve with the advent of new shipping programs that will help reduce costs, CFO Wesley McDonald told analysts. “Shipping costs, as we roll out ship-from-store, should be reduced because you won't be shipping across zones, so that should be a benefit. And we have our fourth e-commerce fulfillment center up and running and automated this year. Last year, it was mostly manual.”

For the first nine months of fiscal 2013, Kohl’s reported:

  • Total sales of $12.93 billion, down by 0.07% from $12.94 billion in the first nine months of 2012.
  • Comparable-store sales declined 0.9%.
  • Net income of $555 million, an 8.9% decrease from $609 million in the same period last year.
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