WSJ What’s News - Kohl’s CEO Says the Retailer Has Made Mistakes

Episode Date: November 27, 2024

P.M. Edition for Nov. 27. WSJ retail reporter Suzanne Kapner explains how Kohl’s mistakes hurt sales and how the retailer is changing course. And megastar Taylor Swift is selling her new book exclusively at Target. Deputy bureau chief for our media team Melissa Korn talks about the unusual book deal. Plus, three Americans are on their way back to the U.S. after China released them from prison in a swap with the U.S. Tracie Hunte hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

You let him try violin because you love him. And if you love him that much, love him enough to make sure he's buckled up and in the back seat. Find out more at nhtsa.gov slash the right seat. Brought to you by the National Highway Traffic Safety Administration and the Ad Council. Taylor Swift's new book is going on sale exclusively at Target, giving the retailer a boost for the holiday season. And Cole's CEO offers up a mea culpa for the department store's recent strategy. CEOs are paid to be right and they don't like to admit when they're wrong. So it is a bit unusual to see a CEO really owning up to mistakes and promising to change direction. Plus, China releases three Americans after years in prison there.

It's Wednesday, November 27th. I'm Tracy Hunt for the Wall Street Journal. This is a PM edition of What's News, the top headlines and business stories that move the world today. China Today released three Americans after years of imprisonment, marking the successful conclusion of an effort by the Biden administration to secure their freedom. Marks Sweden, Kai Li, and John Lung had been serving sentences on espionage or drug charges. The U.S. had long designated Sweden and Li as unjustly detained.

Lung had been sentenced last year to life in prison. Officials said the three men were flying home and were expected back in the US within the next day. Officials declined to say whom the US sent back or if it had taken other steps in exchange. But according to the Bureau of Prisons database, a Chinese intelligence officer who had been serving a 20-year sentence in a US prison and a man he had worked with to steal trade secrets were no longer in U.S. custody today. And in U.S. politics? Is a comeback on the horizon for Andrew Cuomo? According to people familiar with the matter, a longtime ally of the former New York governor has spoken with potential donors about setting up a big money group that could boost a potential run

for mayor of New York City. Cuomo, a Democrat, resigned back in 2021 in the wake of a sexual harassment scandal and an impeachment investigation. He is denied wrongdoing. This year, Cuomo registered to vote in Manhattan, has made speeches at houses of worship in the city, and met privately with officials and labor leaders. A spokesman for Cuomo says it's premature to talk about a formal campaign. Several of President-elect Donald Trump's nominees for top government posts said they were targeted with bomb threats or false emergency reports that sent police teams rushing to their homes this week.

They include agriculture secretary nominee, Brooke Rollins, New York representative, Elise Stefanik, Trump's nominee for ambassador to the United Nations, and Lee Zeldin, who Trump picked to head the Environmental Protection Agency. All three said they were unharmed. According to a person familiar with the incident, Pete Hegseth, Trump's pick for defense secretary,

was also the target of a bomb threat to his home. A Trump campaign spokeswoman said the incidents occurred between last night and this morning. A law enforcement official said the FBI and Secret Service were monitoring the threats. Major indexes fell in sparse U.S. trading ahead of the holiday. The Nasdaq led the clients, dropping 0.6% after disappointing earnings from computer and software companies. The Dow Industrials and S&P 500 pulled back from recent records. U.S. markets will be shut for Thanksgiving and will close early on Friday.

Coming up, Target and Kohl's are heading into Black Friday in the middle of a tough stretch for both retailers. But Target is getting a boost from one of the country's biggest pop stars. That's after the break. Target is betting that Taylor Swift's newest release, The Heiress Tour Book, will turn Black Friday into a red-letter day. Swift is exclusively selling her book, which recaps her record-breaking concert tour, at The Retailer. It's one of the biggest publishing coups of the year and comes at a tough time for Target.

It's been struggling with declining earnings and weak sales, losing grounds to the likes of Walmart and Amazon as consumers focus on staples like groceries rather than trendy home goods and fashion. Target CEO Brian Cornell said last week during the company's earnings call that the book was an exciting partnership. Partnering with Taylor Swift, which will be a traffic driver for our business during an important holiday period. Swift and Target have huge expectations. The Wall Street Journal reported that the initial print run for the book is two million copies. To put that in context,

according to Cercana BookScan, the biggest selling book of 2023, Colleen Hoover's It Ends With Us, sold nearly 1.3 million print copies. Melissa Korn, a deputy bureau chief with our media team, says the deal is an unusual one in the book industry. She's self-publishing it, so she's not going through one of the big commercial publishing houses, which is pretty rare for a book that has this high expectations. She likes to control the access to her content. She likes to know who's getting it and where and how, and that she has final say over things. They also don't have to discount the title because there's

no competition for it. So it can stay at that $39.99 price point all the way through. And to help drive customers to the book displays on Friday, Target will pump Swift's music in its stores. And speaking of retailers feeling the Black Friday pressure, Kohl's is heading into the biggest shopping day of the year with some... Kohl in its talking. Earlier this week, the department store chain posted a disappointing earnings report and told investors it expected sales for 2024 to decline by 7 or 8 percent. Outgoing Kohl's CEO Tom Kingsbury even owned up to a series

of missteps that have sent sales sliding. Suzanne Kapner writes about the retail industry for the Wall Street Journal. So, Suzanne, what went wrong at Coals? Well, they made several mistakes. They were trying to control their inventory. So they cut back on their private label brands, which are very popular with their consumers. They cut back on petite clothing.

And as he said in his words, they were trying to do more with less, and that turned out to be a mistake. And another misstep was that they scaled back their jewelry, their fine jewelry departments to make way for Sephora shops in their stores. And that really turned off shoppers as well. And how did that affect Kohl's most recent results? These missteps really pushed down sales for them. They had a terrible quarter with total sales down more than 8%, comparable stores down

more than 9%. Really really bad considering Macy's was only down about 2.4 percent, Nordstrom reported a 4 percent increase. So they're definitely an outlier in their performance. The retailer says it's already begun making some changes. What should shoppers expect to see if they go to Kohl's this weekend? They've started adding jewelry back to stores. They now have departments in 200 Kohl's stores and they are flowing in more private label brands which they say already is helping to improve sales and they are also

expanding their petite sizes again in stores so they're of course correcting on a lot of these issues. They announced also this week that Kingsbury will be stepping down in January and they have named Ashley Buchanan who currently is the CEO of Michaels companies as their new CEO starting in January and they have named Ashley Buchanan, who currently is the CEO of Michael's companies, as their new CEO starting in January. And so there's going to be a bit of transition happening next year. What kind of Black Friday are we expecting this year? It should be a generally good weekend kicking off the holiday season, but there's some concern.

Customers have been very value focused. When they're spending more on groceries, that just leaves less to spend on other discretionary items that you'd buy for the holidays, whether it's a cashmere sweater or a new coat or what have you. So the National Retail Federation is forecasting a slight increase in overall spending for November and December, but it's the lowest pace of growth since 2018. And how does Kohl's fit in?

They are coming into the season from a very weak position and they have some catch-up to do. They have been losing share to other players and it remains to see whether they can win some of those customers back. That was our reporter, Suzanne Kappner. Thanks so much, Suzanne. Thank you. We exclusively report that investigators suspect the crew of a Chinese commercial vessel deliberately dragged its anchor along the Baltic seabed for more than 100 miles to cut critical data

cables. The ship has been surrounded by European warships in international waters for a week. Investigators are trying to determine whether Russian intelligence induced the captain of the ship to carry out the sabotage. People familiar with the investigation said the ship's Chinese owner is cooperating and allowed the ship to be stopped. The company declined to comment. Russia has denied wrongdoing.

And finally, Tesla CEO Elon Musk is considered a champion of the environment for his role in pioneering the electric car industry. But a new WSJ investigation uncovers an account of environmental problems at his companies, especially at Tesla's Gigafactory in Austin, Texas, one of the biggest car factories in the world. Our reporter Susan Pulliam spoke with former Tesla employees and reviewed regulatory documents, and she told WSJ's Tech News Briefing podcast about what she found. Yes, so there were a couple of issues having to do with wastewater in Austin. One was what they called an evaporation pond, where they were basically dumping water from construction and other areas of the plant, for instance the paint shop. Certain chemicals were being put in the

pond and the issue with the pond was that they didn't tell the city water authority that they were discharging the water from the pond into the city's sewer system without having treated it. If they'd taken out the pollutants or accounted for them, it would have been a different story. But they were sending it through to Austin Water Untreated. They self-reported this to the city. To hear more about Tesla's alleged environmental violations and how the company and regulators have responded, check out this morning's episode of our tech news briefing podcast. And that's what's news for this Wednesday afternoon. Heads up before we go. We'll be

off tomorrow for Thanksgiving, and we'll have just the morning show for you on Friday. Today's show was produced by Ansity Bansi with supervising producer Tali Arbel. I'm Tracy Hunt for The Wall Street Journal. Thanks for listening.