Retailers shift their ad spending from TV, radio and print ads to digital ads.
But one-third of that growth comes at the expense of stores, CEO Kevin Mansell says.
Mass merchant Kohl’s Corp. says 2012 was a banner year for e-commerce, but same-store sales paid for some of the gains.
For the year ended Feb. 2, Kohl’s, No. 28 in the 2012 Internet Retailer Top 500 guide, reported:
- Web sales of $1.43 billion, up by 41.6%% from $1.01 billion in 2011.
- Total sales were $19.28 billion, a 2.6% increase from $18.80 billion.
- Comparable-store sales increased 0.3%.
- Net income of $986 million, a 15.7% decrease from $1.17 billion a year ago.
Web sales accounted for 7.4% of total sales compared with 5.4% in 2011.
Since launching its e-commerce site in 2001, online sales have grown at a compound annual growth rate of 50%, Kevin Mansell, chairman, president and CEO, told analysts during a conference call to discuss the company’s year-end earnings.
The growth, however, does not come without a cost. The e-commerce sales growth is coming partly at the expense of sales in stores, Mansell told analysts. “By our estimate about one-third of our e-commerce growth has come out of the stores,” Mansell said.
That’s one reason for a slowdown in new store openings, he said. In 2012, Kohl’s opened 21 stores compared with 40 in 2011. “We’re not getting the same kind of returns from new stores that we used to,” Mansell said. The focus now is getting more sales out of existing stores, he said.
Other undisclosed costs include hiring e-commerce buyers, planners and technology staff to keep up with the sales growth, he said. The retailer also will deploy this summer a new e-commerce platform from Oracle Corp., Mansell said. Kohl’s will test a mobile payment acceptance technology in its stores in the third quarter, he added.
For the fourth quarter ended Feb. 2, Kohl’s reported:
- Online sales of $640 million. That represented a 44% increase from Internet Retailer-estimated 2011 Q4 online sales of $445 million.
- Total sales were $6.34 billion, an increase of 5.3% from $6.02 billion in the prior year.
- Comparable-store sales increased 1.9%.
- Net income of $378 million, down by 16.9% from $455 million in the same quarter a year ago.
Web sales accounted for 10.1% of total sales in the quarter compared with 7.4% in the same quarter a year ago.