The word "Amazon" was mentioned more than 30 times by executives and Wall Street analysts on the Kohl's first quarter earnings call. Most of the questions stemmed from analysts wondering about the financial impact of the new in-store returns program with the digital retailer, that in many respects, is also stealing sales from Kohl's.
Kohl's tight-lipped executive team largely sidestepped the questions. And that begs the bigger question: Are investors just being too optimistic on Kohl's stock because of its tie-up with Amazon?
"The nationwide rollout of the Amazon returns program is the single biggest initiative of the year," Kohl’s CEO Michelle Gass told analysts on the conference call.
Gass is right, the roll-out of the Amazon returns program is a big under-taking for the retailer.
By July, Kohl's plans to be capable of accepting Amazon returns at all of its 1,150 stores. That means Kohl's employees handle all aspects of the return process. The partnership was inked in 2017 — it has since been tested at 100 stores in Chicago, Los Angelos and Milwaukee.
"We have found the program to be highly successful in achieving our goals in creating a convenient and easy experience for both Kohl's and Amazon customers. Our testing has shown that we are driving engagement with our existing customers and attracting new and younger customers," Gass said.
But how much money Kohl’s will make from the Amazon initiative this year is highly unclear. It's one thing to drive sales from package returners, but Kohl's has to see that translate to its bottom line. Kohl’s Chief Financial Officer Bruce Besanko didn’t explicitly say the tie-up will be a profitable venture this year.
"We do expect that it'll be a contributor to the return to growth that we expect in the second half along with the brands and the expansions that Michelle [Gass] talked about. The SG&A [Selling, General and Administrative] is obviously an increase."
"We know that we will receive traffic from Amazon customers coming into our stores. We need to take that traffic and convert it into sales. And we've modeled some sales into the back half and we're pressing our teams to be sure that they do that efficiently and that they do it well," Besanko said on the call.
Kohl's tight-lipped executive team largely sidestepped the questions. And that begs the bigger question: Are investors just being too optimistic on Kohl's stock because of its tie-up with Amazon?
"The nationwide rollout of the Amazon returns program is the single biggest initiative of the year," Kohl’s CEO Michelle Gass told analysts on the conference call.
Gass is right, the roll-out of the Amazon returns program is a big under-taking for the retailer.
By July, Kohl's plans to be capable of accepting Amazon returns at all of its 1,150 stores. That means Kohl's employees handle all aspects of the return process. The partnership was inked in 2017 — it has since been tested at 100 stores in Chicago, Los Angelos and Milwaukee.
"We have found the program to be highly successful in achieving our goals in creating a convenient and easy experience for both Kohl's and Amazon customers. Our testing has shown that we are driving engagement with our existing customers and attracting new and younger customers," Gass said.
But how much money Kohl’s will make from the Amazon initiative this year is highly unclear. It's one thing to drive sales from package returners, but Kohl's has to see that translate to its bottom line. Kohl’s Chief Financial Officer Bruce Besanko didn’t explicitly say the tie-up will be a profitable venture this year.
"We do expect that it'll be a contributor to the return to growth that we expect in the second half along with the brands and the expansions that Michelle [Gass] talked about. The SG&A [Selling, General and Administrative] is obviously an increase."
"We know that we will receive traffic from Amazon customers coming into our stores. We need to take that traffic and convert it into sales. And we've modeled some sales into the back half and we're pressing our teams to be sure that they do that efficiently and that they do it well," Besanko said on the call.
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