Malls are far less central to retail culture than they once were. The decline of these once-beloved shopping centers has pushed former giants like Sears and JCPenney into mass closures. Meanwhile, other mall mainstays are reporting some concerning numbers. Kohl's and Gap both just reported a substantial decline in sales, which could mean that shoppers are taking their business elsewhere. Read on to find out what's behind their recent drops.
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Kohl's just reported a decline in sales.
ShutterstockIn an Aug. 23 press release, Kohl's Corporation dropped its latest financial results for the 2023 fiscal year. According to the report, the retailer struggled in the second quarter, which ended on July 29. For the quarter, Kohl's experienced a 4.8 percent decrease in net sales compared to the same time a year prior, and a 5 percent decrease in comparable sales.
These weak sales in the second quarter slashed Kohl's profits by nearly 60 percent, the Associated Press reported.
Best Life reached out to Kohl's about its recent sales decline, and we will update this story with their response. But that's not the only retailer facing concerning sales numbers.
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Gap's sales are also down.
Alex Millauer / ShutterstockGap Inc. also just released the financial results for its second quarter of the 2023 fiscal year. In an Aug. 24 press release, the company revealed that its net sales fell 8 percent compared to the year prior, while comparable sales were down by 6 percent. The company shared that in-store sales decreased by 7 percent compared to last year, and online sales fell by 11 percent.
Those results include Gap Inc.'s entire retail portfolio: Old Navy, Gap, Banana Republic, and Athleta. To varying degrees, all of these big-name brands saw sales decline.
When Best Life reached out to Gap for more information, a spokesperson directed us back to the earnings call.
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Kohl's says shoppers are turning away from its online marketplace.
ShutterstockDuring an Aug. 23 earnings call with analysts, Kohl's blamed most of its decline on recent digital changes. As Kohl's CEO Tom Kingsbury explained, the company has been working over the last two quarters to reduce its general promotions and eliminate online-only offers in order to simplify its pricing and make discounts more targeted.
"Most of our decrease came from digital, and that was somewhat self-inflicted because we have reduced the amount of online only general public offerings," Kingsbury said during the call.
But Kohl's is not expecting for shoppers to abandon its online platform for long.
"As far as digital goes, we see it improving as we progress through this year," Kingsbury said. "And then obviously, we anticipate back to growth in 2024, once we anniversary all these online only promotions that we had."
Gap Inc. is dealing with consumer pressure at Old Navy stores.
ShutterstockGap Inc. CFO Katrina O'Connell said that its sales across all four of its brands were also impacted by a "choppy consumer backdrop" during an Aug. 24 earnings call with analysts. But according to the executive, shoppers appear to be pulling back most from one particular retailer: Old Navy.
O'Connell told analysts that the retailer saw "increased softness" with its active apparel, as well as "slower demand" from lower-income customers.
"The consumer pressure is most acute at Old Navy," she said. "We all remain cautious on is whether it's the low-income consumer starting to get real wage pressure from inflation or whether it's the new student loan dynamic, we'll see how that plays out for Old Navy."
