After beginning the year on a sad note with the announcement of mass store closures, department store chain, Kohl’s, now appears to be in the process of enacting layoffs in its corporate workforce. This announcement comes not too long after the company made the decision to close down close to 30 stores across the country, citing underperformance as the reason.
Is this the beginning of the end for this department store?
The Wisconsin-based department store chain appears to be struggling somewhat more than its peers in the industry. Kohl’s has shared that it will be cutting its corporate workforce by 10% in an attempt to return the company to profitability.
As small a figure as 10% sounds, and regardless of the size of your workforce, having to layoff this many employees is no easy decision. However, as is the case with any company or business, sometimes sacrifices simply must be made to prevent the business from being forced to shut down entirely.
On Wednesday, Kohl’s shared that closures of open positions will account for “more than half of the total reduction.” Some current employees who work at Kohl’s corporate offices are also losing their jobs, the company shared with Fox Business.
This decision to downsize the corporate workforce is meant to “support Kohl’s ongoing actions to increase efficiencies and improve profitability for the long-term health and benefit of the business,” according to company as reported by The Wall Street Journal and Reuters previously.
With store closures and layoffs in progress, where does this leave Kohl’s employees?
Employees that will be affected by the scaling down of the workforce have already been informed of the termination of their employment. The retailer has also shared that the employees in question have received “competitive severance packages to help support their transition.”
Parallel to these layoffs, the department store retailer has also put plans into motion regarding the company’s real estate footprint. A shocking twenty-seven stores across fifteen states are set to be closed down in the coming months. The company has shared that employees from these stores that are shuttered will be given to opportunity to transfer to another one of their 1,150 locations. If transferring is not an option, the employees will be given a severance package.
On January 9, the company announced its decision to close multiple stores down as they were deemed as underperforming. These closures have already begun and will come into full effect by the end of April. The company’s San Bernardino e-commerce fulfillment center in California is also expected to shutter the following month. Kohl’s says new technologies will enable them to fulfill orders from more stores instead.
A company in crisis?
Kohl’s shares have drastically dropped by over 50% in the last year. The net income of the company for this period also dropped from $59 million to $22 million. Additionally, the company reported in November that net sales for the third quarter fell approximately 9% from the previous year.
The company shared a comment saying that the closures, like the corporate workforce reduction, seek to “increase efficiencies and improve profitability” for Kohl’s over the long-term.
But can the company really recover in this economy? The average consumer can barely afford daily essentials like food and fuel whilst inflation rates continue to rise. If the cost of living continues to increase whilst salaries remain unchanged, there might not be a future for any retail business, let alone Kohl’s.
Perhaps the future will see the company shifting its focus to a digital business model and putting more effort towards an online store in order to keep up with the times and keep the business running since consumers do tend to show a preference for online shopping these days.