Kohl’s (KSS) , like many other mall retailers across the country, is battling a sharp change in consumer behavior amid recent economic uncertainty surrounding inflation and the impact of President Donald Trump’s tariffs.
In the midst of these challenges, Kohl’s has also been shuttering underperforming stores, announcing in January that it would close 27 of these locations in 15 states by April.
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Last month, it also faced a major leadership shakeup when it fired its then-CEO Ashley Buchanan for engaging in “vendor transactions that involved undisclosed conflicts of interest.”
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Amid these changes, Kohl’s saw its net sales decrease by about 4% year-over-year during the first quarter of 2025, according to its latest earnings report. It also faced a net loss of $15 million.
According to recent data from Placer.ai, the average number of customers that visited Kohl’s stores dipped by 2.7% year-over-year during the quarter. February was its worst month as visits declined by almost 7%.
A person shops in a Kohl’s department store on March 12, 2024 in Miami, Florida.
Kohl’s flags the source of the problem
During an earnings call on May 29, Kohl’s Interim CEO Michael Bender said that the company has noticed that some of its customers are “stressed” financially.
“People are trying to figure out how to make sense of the dollars that they have to spend, and they’re prioritizing where they want to put it,” said Bender.
Kohl’s Chief Financial Officer Jill Timm warned during the call that middle- and low-income customers are “the most pressured,” which is causing them to prioritize value and seek lower prices for products.
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The change in customer behavior comes during a time when many Americans are taking drastic measures to protect their finances amid worries about Trump’s tariffs (taxes companies pay to import goods from overseas) impacting the economy.
According to a recent survey from Harris Poll and Bloomberg News, 3 in 5 Americans said they are cutting back their spending due to concerns about a potential recession. More than 70% of Americans in the survey said they are eating out less, and 57% said they are spending less on entertainment.
Kohl’s makes bold changes to win back shoppers
During the call, Timm also said that sales from Kohl’s Card customers “continue to lag the company” due to several changes the company made in its stores, which it recently reversed.
“Our decisions related to downsizing our in-store jewelry business, exiting the petites business, decreasing inventory in proprietary brands and increasing coupon exclusions had an outsized impact to Kohl’s Card customer performance,” said Timm. “As we have made investments back into these categories and reduced coupon exclusions, we have seen an improvement in the sales trend of these customers.”
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She said Kohl’s “disappointed” its core customer by excluding more brands from coupons than it included. To fix this mistake, Kohl’s added “a lot of new brands” to its coupon selection on April 28.
“We are bringing products back into the coupon, so we do think being more promotional and being having value orientation throughout the year is gonna be important, particularly because this middle-income customer that we serve is pretty stretched in today’s environment,” said Timm.
Despite recently facing a dip in sales, Kohl’s Sephora business continues to boom. During the first quarter, net sales in its Sephora stores increased by 6% year-over-year. Soon, every Kohl’s location will have a Sephora store.
“This spring, we will open 105 Sephora small format shops, which completes the full chain rollout of Sephora at Kohl’s,” said Timm. “Sephora has been a huge success for Kohl’s, and in just four years, we successfully launched over 1,100 Sephora at Kohl’s shops and built nearly a $2 million beauty business.”
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