August 15, 2014, 11:56 AM

Kohl’s maps out its e-commerce plans for 2014

During the chain’s Q2 financial conference call, executives talk up mobile and a test of a buy online, pick up in-store program.

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Kohl’s Corp. in the coming months will enable shoppers to buy products online and pick them up in stores, improve its mobile app and strive for 20% e-commerce sales growth, the retail chain’s executives said this week.

Kohl’s, No. 23 in the Internet Retailer Top 500 Guide, this week reported sales of $4.242 billion in the second quarter ended Aug. 2, up 1.1% from the same period last year. The chain did not release e-commerce figures. According to Top500Guide.com, its web sales hit $1.76 billion in 2013, up 23.1% from 2012.

In a Q2 conference call with analysts, chief financial officer Wes McDonald said that e-retail sales increased more than 20% in July after falling below that growth mark in the first quarter. “We plan to grow e-commerce 20% a year,” he said, according to a transcript of the call provided by Seeking Alpha. “So we underachieved that for a variety of reasons in the first quarter.We are going to overachieve that in July, August, September for sure, and then it should go back to a normalized 20% going forward.”

Last year, the chain’s e-commerce sales suffered as Kohl’s changed its e-commerce platform, CEO, president and chairman Kevin Mansell told analysts, with that technology work focused in the third quarter of 2013. The chain now works with Oracle Corp.'s Oracle Commerce platform.

Kohl’s executives also had this to say about e-commerce during the call:

• “Our retail distribution centers reported lower costs but our e-commerce fulfillment centers reported higher costs,” McDonald told analysts. He added that the chain’s Q2 advertising expenses increased in part because of efforts to drive traffic to the retailer’s web site.

• In order to drive more traffic to the chain’s stores—Kohl’s operates 1,160 stores, McDonald said—the retailer will test a buy online, pick-up in-store program in 100 stores this fall. “Once successful, the pilot will be rolled out to all stores nationwide,” Mansell said. The program, McDonald said, will "really give customers another reason to make a visit that they otherwise might not have made. So it is all about traffic. I mean that’s what we are focused on. It is all about traffic.”

• Mansell also restated the chain’s plans to use about 800 stores to fulfill online orders, essentially making them miniature e-commerce warehouses. “We think this will improve shipping times and provide additional e-fulfillment capacity during the peak holiday season,” he said during the call.

• The chain’s anticipated e-commerce gains will come largely from mobile. “Mobile is driving the e-commerce business,” Mansell said. “And essentially a large portion of the increase in mobile in e-comm traffic has been accounted for on mobile devices, and the shift from desktop to mobile, both phone and tablet, is dramatic, accelerating, and doesn’t appear to have any slowdown in sight.” McDonald said that the chain this year will focus on “improving the mobile app to where it is easier and you can check out in fewer steps.”

For the second quarter of 2015, Kohl’s reported:

• Total sales of $4.242 billion in the second quarter, down 1.1% from $4.289 billion for the same period last year.

• A 1.3% decrease in comparable-store sales.

• $232 million in net income, up 0.4% from $231 million in the second quarter of 2013.

For year to date, the chain reported:

• Total sales of $8.312 billion, down 2.1% from $8.488 billion for the same period last year.

• A 2.3% decline in comparable-store sales

• Net income of $357 million, down 5.6% from $378 million for the first two quarters of 2013. 

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