Dive Brief:
- Kohl's is adjusting inventory strategies in light of tariff pressures and anticipated changes in consumer demand, CFO Jill Timm told analysts during a May 29 earnings call.
- The retailer plans to reduce orders for categories where “the velocity of that demand just won't be there,” Timm said, naming high elastic categories, like small electronics, which are likely to see price increases from national brand vendors.
- “We're making those choices real time and working very closely with our supplier and vendor base to proactively offset any imports,” Timm told analysts.
Dive Insight:
Kohl’s is working to reduce its exposure to countries subject to elevated U.S. tariffs using its factory network to diversify production, ordering goods based on pricing elasticity analysis and collaborating with its suppliers and vendors to proactively manage challenges, Timm said.
The retailer has a “very diverse portfolio” of sourcing countries after its sourcing team worked to diversify production in 2017 following the implementation of the first Trump administration’s adjusted border tax, the CFO told analysts.
“We're not overly reliant on any one country,” said Timm. The sourcing team has “been working tirelessly with our buyers to move our production to different countries to lower tariff countries to help mitigate against those costs.”
Kohl’s inventory was up 1.7% year over year in Q1 2025 due to strategies intended to navigate tariff pressure, Timm told analysts. Strategies include pulling shipments forward and holding seasonal inventory to be sold in the second half of the year.
The retailer plans to continue tightly managing its inventory receipts through the end of the year, Timm told analysts.
“We continue to expect our inventory to be down high single digits by the end of the year,” Timm said.
Several retailers have been reevaluating their inventory mixes as a lever against a fluid tariff environment. Home improvement retailer Lowe’s is currently analyzing individual SKUs and product categories to assess how to adjust its inventory. Discount variety store Dollar Tree is also looking to drop non-economical items in a bid to curb the impact of tariffs.
