Kohl's blames bleak forecast on e-commerce trouble

Kohl's (NYSE: KSS) has lowered its profit forecast for the fourth quarter, saying that fewer customers were in stores and more merchandise was marked down. Those two factors are in line with what the retail industry is experiencing as a whole, as more people shop online and year-end clearance sales make way for spring goods, so no surprises there.

There was one fact about the Kohl's announcement that did raise eyebrows, however. The retailer said it's having some e-commerce trouble that led to a surge in unexpected expenses, and as a result, comp-store sales for the quarter have decreased 2 percent. What's going on here?

Kohl's hasn't exactly been an early adopter in the online space. When retailers started beefing up their e-commerce business as early as 2010, Kohl's was slow to catch on. The company had $18.4 billion in sales that year, but only $717 million came via the Internet. The company acknowledged the need to build its online business in order to boost revenue and generate sales.

Since then, Kohl's has done a lot of work to catch up. Last May, Michelle Gass took over as chief customer officer, a new position for the department store, to oversee the Kohl's e-commerce business. The company implemented a new systems upgrade last fall, which caused business to slow, but the company said in November that the decline would only be temporary and it would be business as usual once the Web sites were back up and running.

Yesterday's news tells a different story. Kohl's is still having problems connecting with shoppers online, particularly unfortunate given that holiday 2013 was a banner season for online sales, increasing 15 percent over 2012.

Kohl's will report its full fourth-quarter earnings on Feb. 27.

For more:
-See this Kohl's press release
-See this Wall Street Journal article
-See this Wall Street Journal article

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