Kohl's Corporation (KSS) Earnings Call Transcript & Summary

Good morning again. It's Omar Saad from Evercore ISI. Thank you for joining our Annual Consumer & Retail Summit and today's very special fireside chat with the Kohl's management team. Welcome CEO, Michelle Gass; and CFO, Jill Timm. Thanks for being here.

Thanks for having us.

Thanks for having us.

So I'm going to dive right in. We've got 30 minutes. I got a set of questions, a lot to talk about with the recovery from COVID and a lot of the strategic priorities you guys are pursuing. I guess I'd start by asking Michelle. You've been there 3 years now. There's been a lot of kind of transformational changes in what Kohl's is and is trying to become. But whether it's the Amazon Returns, the new Sephora deal, you guys are very busy. I'm sure you've got a lot of other things up your sleeve, especially given that 30% target. Is it fair to think about Kohl's as a department store? And then how do you -- what's your vision for the company long term? How are you going to describe Kohl's, the retailer, in 5 or 10 years?

You bet. And again, thanks for having us. So that question is a big one and something we couldn't be more excited about. The journey we've been on the last few years, as we saw where the consumer was going, was to really get after this active lifestyle, this casual lifestyle. And you've seen us do things, like our active business today is -- has more than doubled over the last 5 years. So it's now 20% of our business. But I think importantly, and during -- leading into the pandemic and during the pandemic, we really took a step back and really thought about what should the vision and mission of the company be? What should we stand for? And you referenced department store. And we've always been a bit of a hybrid quasi department store. Typically, you think about department stores being in malls, a certain service model, et cetera. And for Kohl's, and I think it's never been more relevant, number one is we're off-mall. We're highly convenient. 95% of our stores are off-mall. And we've always had an ease-and-convenience factor built in such as having our cash registers at the front of the store. But we have lots of different categories, et cetera. But we have been kind of pacing with the customer, like I said, building out this active business. Well, over the last year, as I said, we took a step back, and we believe that we can pivot the brand from -- if some people still think about us as this quasi department store, really to being much more of a specialty retailer that is known for the active and casual lifestyle. And that is the vision that we put out in October, sharing that kind of bold strategy to be known for and be the leading retailer for the active and casual lifestyle. And then importantly, supporting that a number of transformational initiatives that get us to that vision. And I'd say that's both in terms of the top line as well as the bottom line, the profitability model. And I'm sure we'll talk extensively on both. But as I think about the transformation, I think about the brand portfolio, the customer experience and the value equation. On the brand portfolio, you've seen us make a number of moves. Number one, we radically changed our existing portfolio, exiting more than 25 brands across the store to make sure that what we did represent to the customer, each are really unique and distinctive and serve targeted customer needs. Then as we expand into this active and casual lifestyle while giving that more space, right, with so a tighter brand portfolio. And when we think about active, we think about a full spectrum. We think about traditional active, i.e., go out to work, work out; and we think about casual, like denim and everything in between. And I think what's really exciting for Kohl's is we were ahead of this trend. We were moving in this direction. The pandemic has accelerated that trend. So that's how they're going to be living. They already are. So embracing a more active lifestyle. So we have been selling a lot of activewear. That business was up in the mid-teens relative to 2019, just in the last quarter we represented. But then this athleisure category where it might be certain technology in the fabric that, yes, you can wear it to work out or go to Yoga, but you can go shopping or go to your kid's soccer game, et cetera. The outdoor lifestyle, again, can be used for work, for going out or go hike your local mountain and everything between. And consumers are looking for comfort and they're looking for this flexibility. So I know we'll talk more about that, but I couldn't be more excited about a lot of the new brands we have coming in. Then the experience, and there's many prongs to that. That is the experience inside the store, it's our omnichannel capabilities. And I think the highlight and the game-changer for us will be building out the Sephora shops inside of Kohl's. August 1 goes online completely, our entire beauty business converts. And then in August, we began building out our stores: 200 this fall, on our way to more than 850 over the course of the next 3 years. We're also leveraging that time to transform the store experience to deliver against this mission, vision that we put out in October. And then lastly, on value, we're making a number of moves there. We've always had a very strong loyalty program with our credit card program, our Kohl's loyalty program that we just updated into Kohl's Rewards and, of course, Kohl's Cash. And so simplifying that, having that be stronger. It was something that wasn't broken, but we're a leader. So how do you continue to innovate. So we're leveraging things like personalization and really pleased with what we're seeing in our loyalty program. And then also how we show up to the customer in delivering everyday value. So traditionally, we have been more of a promotional high-low retailer. Promotions are still important. Everybody does promotions to some extent. But we are finding that sweet spot to actually pull back on certain promotions, invest that into price. And by the way, it's also more margin accretive as well. So I assume we'll talk more about that. But it's really all those things working together. And as we grow the business, doing that in a more profitable way against the number of operational excellence initiatives we have underway.

Got it. So I'm kind of thinking about a specialty family retailer for the active and casual lifestyle. That's the vision basically.

You got it.

Makes a lot of sense, makes a lot of sense. So you guys are off-mall. You have a lot of advantages and you have a lot of really great initiatives. You're off-mall, you're big in active, getting bigger. Home has been a winning category. It's a strength. You've got the Amazon Returns driving traffic, and your conversion there seems to be going up. Tommy Hilfiger and Calvin Klein and Sephora and digital and omni. When we take all these advantages and really on-point strategic initiatives and operational capabilities, when and how is it going to translate from an investor mindset? It's a meaningful P&L outperformance versus the sector. And now we're going to see it in the forms of comps, consistency, margins, returns. I think this is a question that probably Jill's going to spend some time on, but I think that helps to kind of encapsulate the strategic priorities and how we're going to see them in the numbers eventually.

Well, I can start, and then Jill can also complement my answer. First of all, I would say, I think you're already seeing it, right? We've shown now across multiple quarters, progressive improvement as we are emerging out of the pandemic. Clearly, some of that is the beneficial backdrop that everybody's seeing, but our strategies play right into that, as I was just saying, people wanting to live a more active, more casual lifestyle. Those are the categories that we see really driving; I mentioned active business being up double digits in 2019. If we look at apparel and speak more to that casual side, it was the apparel categories that accelerated the most versus 2020 as people weren't buying as much on apparel. So we're really pleased to see that momentum. And even as you just said, Omar, things like home, we see it being relevant in home, especially in our private brand. So soft goods, decor, we're investing more in those areas. We're seeing that business perform. So I do think you're already seeing that. We're pleased to see our March, April produce a positive comp to 2019. We shared on our last call that, that momentum carried on into May, and we're very excited as we head into back-to-school and the balance of the year based on the importance of those seasons, and all the innovation we have ahead of us. And then on the margin side, I'll just hit the headline, we set this aspiration to 2023 to get to 7% to 8%. And you saw in Q1, we hit it. So now there was a number of things working in our favor in Q1 surely, but we do see that, that is very much in reach to drive both growth and have it deliver more profitably. And I'll hand it off to Jill, too.

Yes. I would echo her sentiment is we did hit 7%. Obviously, it's 1 quarter, and every quarter performs differently, but I think a lot of our initiatives are paying back. If we start with just margin and inventory management, our turn for 3 quarters in a row have improved to 5- and 10-year highs. So we continue to come from a very clean position for inventory. And so we do expect that will continue to persist. And we know when you run a clean inventory with a faster turn, you have better reg selling and you have better margins. And so that is a place of strength that we're positioned from. Second, we've been working on our sourcing initiative for some time. We committed to $125 million to $175 million of savings. We'll start seeing that benefit us in the back half of the year as those items will now be receipted in. So that's actually positioned us well even to offset some of the pressures that you're seeing across the market with the commodity inflation that we've been able to manage through this initiative. So that sets us up incredibly well. And then the promotional activity. We are definitely standing more for value, as Michelle mentioned, less about couponing. So we were able to take advantage of the pandemic environment, of the full reg price selling environment that persists. And we've really been able to do that and our customer -- our new customers, especially, is starting to see that value shine through. It allows us to be much more competitive across the landscape, especially with the transparency that digital business has brought forth. So we're seeing our customers see the value. They're not waiting for the coupon. Of course, we're still on sale, but they're seeing it in a truer light to get clarity to the end price faster. And then we're using the data that we have through our incredible loyalty and credit program to bring targeted and personalized offers. And if I pivot over to SG&A, I think we've just been very disciplined in how we manage SG&A, but marketing hasn't been a place we've cut. We've spent $1 billion a year. This year, you saw our ADS in Q1 was down 100 points to 2019, really pivoting into that digital media by using social media to launch. In fact, we launched FLX completely on the social platform, and it's worked really well. So we're talking to that younger customer in a more effective way and it allows us to be much more agile to move with the customer because they're not committed to that print so upfront. And then second, on the store transformation, wages is definitely a pressure that we continue to watch. We're looking for a lot more self-service. We're starting with self-pickup for your buy online, pickup in store, self-returns, and then we'll evolve it to self-checkout. And you'll see that we'll have self-pickup and self-returns testing in over 100 stores in the fall. So we've been really working towards that so we can make it much more convenient to the customer. Give you more time to dwell in the store and buying things and had have to put so much labor in those transactional pieces of our business. So I feel incredibly confident that we are well underway to hitting our 7% to 8% operating margin goals. We feel very confident in what we've outlined and the progress we've made.

Following up on that kind of operating margin goal, maybe you could help me talk about the credit income and that credit side of the business, the importance there. I think Jamie Dimon said the other day there's another additional $2 trillion in people's savings accounts. And people are buying on credit, but paying down the balances more. Obviously, your operating margin seems to be holding up well. But maybe you could kind of talk about your expectations for the credit program. Its importance in the overall ecosystem. And how you might manage around this period where people have so much extra savings?

So I would say credit, as you know, is incredibly important to us, one, from a loyalty perspective. So we bring people in, they get Kohl's Cash, we get the second purchase, we get them into our rewards program. And then ultimately, we get into the credit card program. They shop us with the most trips and we get the highest amount of wallet share. So it's incredibly important from a customer perspective and really getting as much out of that customer as possible. So that's where it starts. Obviously, it's also lucrative from a revenue perspective and what it does from an operating margin. As we see those customers build into accounts receivable balances, and then we're able to revolve them and make some interest and late fee income from them. You're absolutely right, healthy customer right now. We are seeing unprecedented payment rates and they're great. That means that we don't have any write-offs looming in the future. So we have a lot of foresight into that. But they are paying things off, which you did see our credit revenue was down year-on-year in Q1. It did beat our expectations, but it was down, and that's twofold. One, we came in with a lower AR balance given the pandemic impact it had on sales. It lowered our sales last year, which then in turn, lowered our AR balance. And then second were these high payment rates. We do expect AR to build throughout the year as sales continue to do well. And then we do expect some type of revolving metric to happen. I do think some of the stimulus and excess savings, as you mentioned, have made people a little easier to pay off bills. But as we move into some normalcy, we do expect that to come back as well. So it should grow through the rest of the year and be overall pretty flat as we end the year, and then we'll continue to focus on growing that portfolio throughout the next couple of years. The good news, as you highlighted, is we didn't need that growth to hit the 7% operating margin. So I know a lot of times, there's been some factors of us being really reliant on that customer to drive our operating margins, and you can see the strategies alone allowed us to do that. So this will just actually make it better for us, both from a top line because these customers buy a lot, but also then the bottom line as they flow through.

Yes, that's an interesting call out on the first quarter. Michelle, Amazon, it's been a really kind of bold and innovative partnership, if you will, driving a lot of traffic to your stores. What have you learned from that process? What have you learned about converting those customers to Kohl's customers when they're dropping off return -- Amazon Returns? I know I think on the last call, you said, I think there were 2 million new Kohl's customers, shoppers as a result of the program. So that's really exciting. And then how about Sephora? So Sephora is a bit different. It's traditionally maybe a bit of a younger and maybe a bit more of a premium and fashion cutting-edge-type customer. How are you going to attract her to become a Kohl's shopper longer term as well?

Yes, great question. So I think both examples point to how we're just thinking differently and innovating. And I do think the companies who are challenging the status quo, thinking differently about their model, taking advantage of all the disruptions happening, those are the companies ultimately will be winners in this dynamic retail time. And certainly, when we announced the partnership with Amazon, there was a lot of surprise, a lot of excitement, maybe some questions: how is this going to work? But it really goes back to fundamentally, and you can look at a lot of our brand partners as well that partners that we can foster where we can leverage each other's strengths. And I think the same is true for Amazon and Sephora and a number of these initiatives that we've been talking about. So starting with Amazon, this was all about, for Amazon, them having a partner that can provide an exceptional customer experience as it relates to returns because we all can relate to lots of boxes going out there, being at your doorstep, and it's not the funnest thing to return it. And it's always been a great strength of Kohl's in terms of our customer service. And we ourselves have seen in our business that when people order from Kohl's and they have it shipped to home, the easiest thing for them is just to drop by the store. So we're extending that core capability with now another partner. And so Amazon gets this very frictionless, easy, it's free. You don't have to package it up. What Kohl's gets is access to all these customers, and that's only accelerated for Amazon surely during the pandemic at a time where -- some period of time, the only way that they could order things like we sell was online. So the way the thing works is basically you just need some percentage of those customers to cross the aisle and buy stuff. And we're able to leverage a lot of our infrastructure, the stores, things like reverse logistics. And yes, we do invest in labor and those things. But when all is said and done, we get the traffic, we get the conversion, and that is accretive to the top and the bottom line. And as you just mentioned in your question, Omar, we saw last year 2 million brand-new customers to Kohl's, which we're excited about. We are pleased with the short-term benefit, but I think especially as we look to, over time, expand the overall Kohl's customer base and turn them into regular customers. And the teams are doing great work as it relates to enhancing conversion. In some stores, given the volume we see in those returns, it just makes sense to have a separate station for Amazon Returns. And again, it all works in our model. And when we have that, we actually put it in the back of the store. So that, that customer can see all the great things we sell on their way to bring in their Amazon Return. We also have experimented with different offers and the like. So I think it's safe to say that we and Amazon are pleased with how it's benefiting both companies. And then Sephora, I think a similar thing. It's bringing 2 great brands and companies together who are highly complementary. I mean what Sephora gets is the strength of our omnichannel platform, starting with our stores, and our plan is to launch Sephora in 850 stores over the next 3 years, starting with this fall, our first 200. The off-mall presence, there's very little overlap between Kohl's and Sephora just from a radio standpoint. So that means lots of incremental customers to both of us. As you mentioned, they index a bit higher in a younger, more diverse customer. So now, us creating that access and convenience, we're looking forward to welcoming all these new arguably younger customers. Though we do expect that Sephora's going to resonate with our existing customer. Even today, we serve millions of customers -- we have 65 million customers -- we really touch every demographic. So whether it is the teens, the millennials or the 30, 40, 50-something, we think Sephora's going to be a big hit with all these customers. And we're not -- I mean, we're pulling out all the stuff. So we're going to be building this beautiful shop-in-shop, 2,500 square feet right in the front of the store. We're branding the door. Most of our stores have 2 doors, so one of those will be dedicated to Sephora. And so there'll be no mistaking when someone's is driving by that they will see that very iconic Sephora branding. We're going to plus that up with marketing, a lot of digital marketing, which we've also really evolved our sophistication. And then we're doing a lot within the store. Again, I would say that everything we've been doing, Omar, the last like 5 years and especially the last couple, has been to evolve the brand of Kohl's, make us more relevant, more modern, more youthful. And those things really culminate this fall with the curtains up moment, with the Sephora opening up with these new brands like Calvin Klein coming in and Tommy Hilfiger and others, Eddie Bauer. And we're reflowing our entire store to be consistent with this new lifestyle concept. And where it makes sense, actually investing in the experience as well updating the store. So we couldn't be more excited. I mean, Sephora is clearly a game-changer for us, but all of these things coming together so that our existing and new customers can see an even more relevant, more exciting Kohl's.

And that active piece, I assume, is a big overlap with the Sephora, that whole active lifestyle? Is that a fair way to think about it, too, beyond Calvin Klein?

100%, absolutely. I mean, we know today, even those iconic active brands, Nike and Adidas, Under Armour, do over-index with a bit of that younger customer, and we see that in our own data. We're going to take advantage of that with this reflow and move active right to the front of the store. So in its full glory, updated, and we've been evolving the assortments with all of those brands and getting exciting new innovations from all of them, expanding the footprint, like I said, et cetera. So taking full advantage. And across the store, upsizing, I think, even on the casual side, Levi's. Levi's is highly relevant with that younger customer, doing really well overall well with us. So amplifying Levi's. We're building an expanded Calvin Klein experience adjacent to the Sephora shop in those categories that are relevant with that customer, the intimates, the basics loungewear. So yes, taking full advantage, informed though, importantly, by our data and where the customer is and is going.

Got you. Got you. So I got to ask another follow-up. So yes, I mean you're -- Cole Haan, Calvin Klein, Tommy Hilfiger, Eddie Bauer, Sephora, expanded Nike and Adidas and Under Armour. I'm assuming -- are we at the end of the line here? Or can we expect more kind of new brand surprises and things up your sleeve as we progress throughout the year and years?

Well, Omar, I hope we have continued to keep you guessing over the last few years with all of these announcements we've made. Yes, the job is never done. Of course, we continue to have exciting conversations with partners. Some you might expect, some that are a little more out of the box. Everything we do is going to go through the lens of what's relevant to our existing and new customers, what speaks to this new strategy of being the trusted retailer of choice for the active and casual lifestyle. So it's not -- it's never going to be spaghetti against the wall. It's going to be really, really thoughtful and disciplined. But where the customer is going is they do -- they want to see innovation. They want to see relevance, like I said, that's active and casual lifestyle. And what's that surprise and delight. And one of the things -- I haven't mentioned it in this call yet, but a program that's doing quite well for us is Curated by Kohl's. And that whole idea of under this platform, constantly introducing and cycling new innovative brands, some of which you may have heard of or some of which you haven't. And it gives us a test bed to always be looking at what might resonate. It's not across all doors, but we've been expanding it. It's online. And you take something like one of our favorite examples, Lovepop cards, a greeting card that retails for $13. You can't use your coupons on it. So it's not a cheap card, but it's a beautiful card. You've seen it, it opens up. It's pieces of art, and that's doing really well for us, and we're taking that across the chain. So that's another way, that if someone is making the decision to come in the store, how are we going to continue to engage them and make the shopping experience truly that, an experience and discovery and fun and exciting.

Got it. That's really helpful color. I'd be remiss if I didn't ask you about kind of the pandemic-friendly categories, if you will, versus the dressier, maybe lifestyle we had pre-pandemic. A, are you seeing anything in the trends? I know apparel was an area of improvement, have been softer pre -- in previous quarters. Anything you're seeing on that kind of pandemic versus recovery-type categories? And then any -- I'd love to hear your views. I mean you guys have as broad of a reach and as much data as just about anybody. Your views on the casualization trend, is it going to translate and stick when we go back to office? Are we going to be putting on dressy clothes again? Any kind of like high-level thoughts around that would be helpful. People would be curious to your opinion.

Yes, I have a lot of passion around this topic. And again, I think we saw this sort of coming even pre-pandemic based on our own consumer insights and data that customers want to live more actively and they want to live more comfortably, but they don't want to give up fashion and feeling good. So what we are seeing and what we believe will stick is this casualization. There's lots being written about. We have already prepositioned ourselves by amplifying casual and active categories and then downsizing, or in some cases, exiting brands and categories that we don't think are as relevant and not as consistent with this trend. So a few examples for us would be -- and you can point to national brands and private brands. So on the private brand side, one of our flagship brands is SONOMA, which its DNA is all about casual, rooted in denim, great fabrics, but also with fashion and very appropriate to wear pieces of that to work or to go out to a restaurant or to travel, et cetera. I think all the innovation that's happening in active and athleisure. So whether it's brands like Adidas or Champion that have great Athleisure presence that, again, you might be wearing pieces of that to go even to the office, but it looks smart, it looks good. Or our own new brand, FLX, that we just recently introduced, it's off to a terrific start. High-performance fabrics. Jill's wearing the FLX blazer. It's hard to tell on video, but it's sharp, it looks great, but it's also made of technical fabric, so it's super comfortable, and you can even throw in the wash. So there's -- I think there's never been a more exciting time in retail than to be in the apparel category with the dynamics of all these trends. But I think we are phenomenally well positioned. And yes, for the occasional time that you might go back to wear a dress shirt, you may not wear it with a tie. We sell dress shirts, but we're going to be really focused -- but you're probably going to be pairing that with a pair of dark denim, SONOMA, Levi's, take your pick. We sell lots of pairs of jeans at Kohl's. And then you might be wearing it with pair of sneakers because sneakers are cool. And you can wear those to the office and you can wear them to run around town. So we sell all of that, and I think it's going to be really fun for people to experiment what is appropriate in the fashion cycle as we look forward and as they go about now their new normal life.

Yes. I tend to agree. And I think the kind of jean -- the denim/sneaker question is a big one when it comes to return to office. It's probably one -- hopefully, my boss start listening. I try to push the envelope a little bit when we return in the fall. But you can. You can wear a nice pair of jeans and a really nice pair of sneakers and even fashion sneakers if you want to be on the kind of cutting edge, so to speak, and still look really business-like for work. So I tend to agree. I got to say, I wore leather dress shoes every day for a long, long time, and my feet just don't miss those.

Yes, I've heard people talking about, God, am I ever going to get back in heels again? And -- but there are great heels out there that -- and again, find them at Kohl's that look great, but they're also comfortable. And I think our lives, we talk about the hybrid workplace, but our lives are going to be hybrid. So we do need that flexibility. And we're going to stay really close to how the consumer evolves and make sure we're serving them well.

Right. Right. Let's kind of maybe turn the conversation a little bit back towards profitability and margins. And then I have a question on the guidance that you provided. When I think about e-com profitability, what are the biggest opportunities? I think we did a Kohl's order somewhat recently, sorry to bring this up publicly. I think it came in several different packages. I know it's an opportunity for you and many retailers, of course. You're not alone. The complexities of managing inventory. But maybe talk about omnichannel and e-com profitability and where you are in that curve, using data and analytics to help solve some of those equations. And how much wood there is left to chop in that sense?

Yes. I would say we've outlined the fact that for every 100 points of penetration that we put into the digital side, it's about 10 bps of headwind to gross margin. And so we continue to look for ways to mitigate that. One is trying to keep it together. So unfortunately, Omar, you do not have that experience. I know we have talked about your split, but really working on our inventory allocation. And we are looking at supply chain transformation as one of our key initiatives to really drive that gross margin and op margin profitability. And that's going to start with really just the dynamic allocation of goods, being able to allocate goods closer to demand so we're getting it in the right channels, so when you make your order, we can keep it together in 1 box. So that's definitely a priority 1. Second is how do we get more pickup. So right now, pickup is about 15% of our digital demand. How do we drive more pickup? And obviously, there's no shipping costs and will lead footsteps in the store. And we can take advantage of those successful catchment sales. So there's a huge benefit for us to continue to drive more pickup. We've launched buy online, pick up in-store as well as buy online, ship to store, so you can get those web exclusive items in the store relatively quickly. And since we don't have anything you need in that immediate couple hours, you could wait, in some instances, for a day to get that item. And we have drive-up, which is another level of convenience. You don't have to leave your car and you can do that. So really trying to make it as easy for the customer as possible from a pickup perspective as well. But then even more globally, we're going to look across omnichannel and say, potentially, there could be incremental shipping costs to avoid markdowns or stack-outs. And that example would be if I ordered some items from Menomonee Falls, let's say order my FLX Blazer. I live there. It should ship to me from Menomonee Falls . It's the closest and fastest way to get it to me. But if this blazer has a really high sell-through in Menomonee Falls, I may source it from a store in Missouri because the sell-through is much lower. I can avoid a potential markdown liability. And I can also potentially avoid stack-out Menomonee Falls. So it's a win-win. I can still get the -- fulfill the in-store footsteps as well as fulfill that order, but I would have to invest a little bit more shipping than across additional zones. So that's really where the future is going, is we see ourselves as a strong omni retailer and how do we then really source those goods as well from an omni-channel perspective. So we'll continue to look for efforts to bring those costs down, but we could make some investments to overall lift the gross margin for the organization.

Got it. Got it. And now that in-store pickup piece, do you do things to incentivize your customer to do in-store pickup? And then, don't a lot of the returns end up coming back via in the store anyway? Is there a way to kind of reverse that? Like come into the store to pick it up instead of shipping it to you and then coming back anyway?

Yes, we do incent them. So there's something we call smart cart. So if we know we can fulfill it from a store near you, then we will say, "Hey, we'll give you a $5 off, Kohl's Cash, percent off, there's different offers that we'll utilize in order to incent the customer to pick up. And you're absolutely right. We do have a way -- of all of our returns happening in store, I think, over 90% of them, so we can capture those footsteps. And one of the efforts that we spoke to earlier is making that so easy to have self-returns. I like it in the back of the stores, then you have to wander through and we can get you to dwell and buy other things. But really trying to make it so easy for that customer so that they understand the convenience; not on mall, like Michelle had mentioned, it is so easy to come in and shop Kohl's. We're going to make it as convenient as possible for you. And that can then drive those additional footsteps as well.

Are you seeing pickup trends improve? Are people choosing that option -- more option, whether it's curbside or in the store, especially post pandemic? Or is it kind of staying steady?

I would say the benefit we saw in March and April, like Michelle mentioned, the positive comps, came from the stores. So really, I wouldn't suggest that the pickup was the driver of that, but more so that people were just feeling, I want to get out, I want to have that experience in the store and so we did see that traffic moving into the store base, not just to pick up, but rather to actually experience it and to shop and see what's new. We are just talking today like we all need to refresh our wardrobes, it's been a long time since we've done anything social and gone out, and so you're really looking at what have you worn. And I think a lot of people are having that exact experience, so they wanted to come in the store and see what they're missing out on because they were, I think, quite honestly, sick of being at home and doing that, it was a way to get out. And they feel incredibly safe in our stores. We have large boxes. We've made a lot of investments in health and safety of the customer. And so we are able to see that trend line change dramatically in March to April.

That's really helpful. All right. My last question, we're bumping up against time. I mean, you guys talked a lot about great things happening in your business, future initiatives that are going to kind of continue the trend and accelerate it. But in your -- when you guys gave guidance on the last call, I think your March and April trends were, I think combined, up low single digits or something like that versus 2019. Maybe you could talk about any underlying factors and the guidance implications for kind of a softer rest of the year on the sales line? Are there things we should be aware of as we think about how the rest of the year will progress? Or is it really just a matter of the uncertainty and kind of keeping reasonable expectations?

Exactly that. I think, first, I want to echo, like we have incredible confidence in the strategies that we've employed. We feel great with how they have -- the customers responded to them. But it was early in the year. We were 90 days in. And really, we saw a challenging February. So we're really talking about a trend line change in March and April. I think there's a lot of uncertainty that was persisting. I don't know that we expected the vaccination rollout to happen as quickly as it did and the confidence that it instilled in the consumer to come back in. So we wanted to be really thoughtful and prudent in our outlook as we look at the rest of the year, just not knowing what that would look like. So I think that is one. Obviously, the stimulus, the pent-up demand are definitely driving some of this. We definitely believe the strategy that we have to unfold in the back half of the year will help us continue to drive the momentum. But we wanted to be thoughtful and really just prudent in the guidance to not get overly excited with some of the trend lines that we had seen for really a 60-day time frame. So I wouldn't read too much into it. I think there's any big surprises that were unfolding, but rather just really the thoughtfulness of as we didn't want to get overly excited about a 60-day trend. But as I end that comment, I just want you to know that Michelle and I are incredibly confident in achieving the goals that we did outline for you by 2023.

I totally understand. I mean, look, it's a global pandemic that none of us have lived through before. There's no reason to be a hero early. So I appreciate both your discipline and then all the insights we had on this conversation during this chat today. I really appreciate your time. Thank you so much, Michelle and Jill. Have a great rest of the week.

Thanks, Omar.

Thanks, Omar.

Thank you.