Kohls Corp benefits from AI virtual try-on technology trends
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jul 16 2024
0mins
Should l Buy KSS?
Source: 4
Kohls Corp's stock rose by 5.04% as it crossed above the 5-day SMA, reflecting positive market conditions.
The rise in Kohls Corp's stock is amid the retail sector's increasing adoption of AI virtual try-on technology, which is expected to enhance online sales conversion rates significantly. Retailers like Zara and ASOS are already implementing such technologies, showcasing the potential for improved profitability in the sector. This trend indicates a broader shift in retail strategies to leverage AI for better customer engagement and sales performance.
As the retail industry embraces innovative technologies, Kohls Corp is well-positioned to capitalize on these advancements, potentially leading to increased sales and profitability in the future.
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Analyst Views on KSS
Wall Street analysts forecast KSS stock price to rise
13 Analyst Rating
1 Buy
7 Hold
5 Sell
Moderate Sell
Current: 12.900
Low
7.00
Averages
19.58
High
25.00
Current: 12.900
Low
7.00
Averages
19.58
High
25.00
About KSS
Kohl's Corporation is an omnichannel retailer. The Company operates approximately 1,100 stores and a Website www.Kohls.com. The Company’s Kohl's stores and Website sell private and national brand apparel, footwear, accessories, beauty, and home products. The Company’s Kohl's stores generally carry a consistent merchandise assortment with some differences attributable to local preferences, store size, and Sephora at Kohl's shop-in-shops (Sephora shops). Its Website includes merchandise, which is available in the Company’s stores, as well as merchandise that is available only online. Its merchandise mix includes both national brands and private brands that are available only at Kohl's. Its private portfolio includes established brands such as Apt. 9, Croft & Barrow, Jumping Beans, SO, Sonoma Goods for Life, and Tek Gear, and nationally recognized brands such as LC Lauren Conrad, Nine West, and Simply Vera Vera Wang.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Significant Market Potential: Bernstein estimates that GLP-1 users could purchase between 150 million and 700 million apparel items due to weight loss, translating to an additional $13 billion in annual spending in the U.S. apparel sector, highlighting robust market demand.
- Brands Adapting to Change: Retailers like Stitch Fix have launched targeted marketing campaigns for weight loss users, with client mentions of weight loss requests tripling over the past two years, demonstrating brands' proactive adaptation to this emerging trend.
- Shift in Consumer Behavior: An increasing number of consumers are opting for more affordable clothing during their weight loss journey, with Destination XL's CEO noting that about 25% of their customers are using GLP-1 drugs, leading to a preference for cost-effective options.
See More
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- Return Rate Challenge: The National Retail Federation estimates that by 2025, 15.8% of retail sales will be returned, with online sales seeing a staggering 19.3% return rate, significantly impacting retailers' profitability and driving them to seek AI solutions to mitigate returns.
- Virtual Try-On Technology: AI startup Catches has launched a virtual try-on platform that allows users to create a 'digital twin' for clothing trials, utilizing physics to simulate fabric texture, which is expected to significantly enhance online sales conversion rates for luxury brands and drive profit growth.
- Market Response: Retailers like Zara and ASOS have begun implementing virtual try-on tools and return fee policies, with Zara successfully protecting its gross margin through these measures, while ASOS reported a 160 basis point reduction in return rates, showcasing the potential of AI technology in improving profitability.
- Industry Outlook: As AI technology continues to advance, it is expected to drive transformation across the retail sector, with Catches projecting a 10% increase in conversion rates and a 20 to 30 times return on investment for brand partners, indicating the growing significance of AI in retail.
See More
Kohl's Shares Decline as Earnings Miss Expectations
- Earnings Report Insight: Kohl's reported adjusted earnings of $1.07 per share for Q4 2025, surpassing the market expectation of $0.86, yet net sales of $4.97 billion fell short of the $5.02 billion forecast, indicating a struggle to balance profitability with declining sales.
- Ongoing Sales Decline: The company's year-over-year sales dropped by 3.9%, with comparable sales down 2.8%, and guidance for 2026 suggests a further 2% decline in net sales, marking the fifth consecutive year of decreasing same-store sales, highlighting the challenges in its turnaround efforts.
- Store Strategy Adjustment: Management has ruled out further store closures in the near term, with CEO Michael Bender emphasizing a focus on optimizing existing store productivity, indicating a strategy aimed at enhancing efficiency to counteract sales challenges.
- E-commerce and Physical Store Synergy: Kohl's e-commerce platform accounted for 35% of Q4 sales, and over 90% of its 1,150 physical locations remain profitable, underscoring the critical role of brick-and-mortar stores in supporting its online business, with future plans likely involving improved inventory management and value positioning to drive transformation.
See More
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- Earnings Decline: Kohl's reported adjusted earnings of $1.07 per share for Q4 2025, surpassing the expected $0.86, yet net sales of $4.97 billion fell short of the $5.02 billion forecast, indicating ongoing challenges in sales recovery.
- Sales Drop: Year-over-year, Kohl's sales decreased by 3.9%, with comparable sales down 2.8%, and the guidance for 2026 suggests a further 2% decline in net sales, marking the fifth consecutive year of declining same-store sales and highlighting the difficulties in its turnaround efforts.
- Store Optimization Strategy: Despite the sales pressures, CEO Michael Bender emphasized a focus on optimizing existing store productivity rather than closing stores in the near term, indicating management's intent to enhance performance through existing assets.
- E-commerce and Physical Store Synergy: With 35% of Q4 sales coming from e-commerce and over 90% of its 1,150 physical locations remaining profitable, Kohl's demonstrates a commitment to leveraging the synergy between online and brick-and-mortar operations, suggesting potential adjustments to store strategies in response to market dynamics.
See More
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- Fed Policy Expectations: Federal Reserve Chair Jerome Powell is set to hold a press conference, with markets largely expecting interest rates to remain between 3.5% and 3.75%, as inflation and labor market uncertainties complicate future policy decisions.
- Macy's Sales Warning: Despite Macy's fourth-quarter results beating expectations and a 9% stock price increase, the company has issued a cautious outlook for the fiscal year, forecasting lower sales and earnings per share than last year, indicating a wary stance towards market conditions.
- Rising Oil Prices Impact: Brent crude prices rose 3.2%, surpassing $103 per barrel, pushing U.S. diesel prices above $5 for the first time, reflecting the ongoing impact of the Iran conflict on energy markets.
See More
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Quarterly Results Reaction: Ulta Beauty's fiscal fourth quarter results have received a negative response from Wall Street despite positive aspects of the quarter and the stock.
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See More
