The news of job losses is always a tough one to take. Not just for the people whose jobs are actually on the chopping block, but rather for all those who follow economic news. Jobs are the lifeblood of an economy, since they produce cash, and also things that make cash useful. News recently emerged about a slate of job cuts at Kohl's (NYSE: KSS) that's part of a larger restructuring program aimed at keeping the company viable going forward.
A Set of Limited-Scope Job Cuts
Word from Kohl's is that the cuts were to be focused on corporate-level positions. Regional store leaders were targeted, as were merchant team leaders. No stores were slated for closure as a result of this move, and while the cuts were heavily corporate-focused, no corporate offices were planning to be closed either.
The employees impacted by the measure would find themselves about as well-treated as possible, with both severance packages and outplacement services set to be offered. In fact, word from the company noted that the company was still looking to do some hiring in certain areas, suggesting that this was more a streamlining measure than anything else.
Kohl's also noted plans to continue investing in a range of customer-facing efforts, including improving stores and augmenting technology, as well as focusing on efforts specifically designed to yield growth.
And Growth Is Just What Kohl's Needs
While discussing the plans to cut jobs ahead, Kohl's noted that it is actually doing reasonably well, noting that it's in a “...position of financial strength,” according to a statement from the company. Some may doubt that, especially given Kohl's recent stock performance—down almost a third over the last 52-week run—as well as its less-than-stellar performance over the all-important holiday season, as the company saw same-store sales decline 0.2%. This is especially tragic given that the S&P 500 itself has gained 22.8% in that same time frame.
It doesn't help that the fourth quarter and fiscal 2019 earnings reports are set to hit March 3, with an investor day to follow slated for March 16. Kohl's launching job cuts in that time frame could be seen as an attempt to goose profit and loss numbers ahead of those key dates and help keep investors from staging a mass exodus.
Kohl's Fights Back Amid Broader Market Struggles
We know full well the challenges the retail market has been facing these last few years. While we've seen some successes in the market—Target (NYSE: TGT) and Walmart (NYSE: WMT) have done particularly well here—we've also seen plenty of formerly-prosperous stores foundering as market conditions change. The recent struggles from companies like Foot Locker (NYSE: FL), the Children's Place (NASDAQ: PLCE), and American Eagle (NYSE: AEO) have all driven that point home just within the last few months.
Kohl's move to cut jobs here, meanwhile, is a tough one to take. It's going to inherently limit their ability to progress—how many of those 250 jobs cut represented those of Kohl's shoppers—but the move should have a comparatively limited impact. Losing 250 shoppers is a blow, but when measured against the thousands who show up every day, it's a blow the company can weather.
Common Traits to Success Emerging
One thing we do know is that the success stories in retail all seem to have some threads in common, points likely not lost on Kohl's. Kohl's plans to improve technology and the in-store experience should be helpful going forward; these are clear echoes of Target's own plans, which focused on smaller stores and a vastly augmented online presence. This takes advantage of customers' desires to see and interact with a product physically while also taking advantage of the benefits of online shopping. Reduced expenses in property, plant and equipment—the cost of heating a regular-sized store versus that of a big-box store likely boasts marked differences—and similar savings don't hurt either.
Though the loss of any job is regrettable—and it also hurts the broader economy as fewer shoppers go forth to buy—sometimes cuts are required to help propel a company to victory. Kohl's is clearly out to do what needs doing to get the company back on top.