Retailer Moves to Improve Sales Amid Economic Strain
Kohl’s has reversed a controversial coupon policy change that had been in place for five years. The decision comes as the retailer works to improve its sales amid financial difficulties exacerbated by inflation and global economic challenges, including President Donald Trump’s reciprocal tariffs.
Economic Pressures on Consumers
During a May 29 earnings call, Michael Bender, Kohl’s interim CEO, discussed the financial challenges facing many of the retailer’s customers. He noted that many people are feeling financially “stressed” due to inflation and ongoing economic uncertainty. Bender explained that consumers are being more selective about where to spend their money, prioritizing essential purchases over discretionary ones.
Kohl’s CFO, Jill Timm, also highlighted the struggles of middle- and low-income shoppers, who are particularly impacted by rising prices and are looking for better value from retailers like Kohl’s. A recent 2025 survey by Bloomberg News and Harris Poll found that three out of five Americans are cutting back on spending due to recession fears, with over 70% eating out less and 57% reducing spending on entertainment.
Coupon Exclusions and Customer Backlash
Kohl’s had previously implemented policies that increased coupon exclusions, which led to a drop in sales from Kohl’s Card holders, according to Timm. She pointed out that these exclusions, along with decisions like downsizing the in-store jewelry business and reducing inventory in certain categories, negatively impacted customer performance.
In response, Kohl’s has reversed many of these decisions, including reducing coupon exclusions and investing back into product categories that had previously been scaled back. Timm emphasized that restoring these benefits has already shown a positive effect on sales, particularly among the retailer’s core customer base.
“We are bringing products back into the coupon, so we do think being more promotional and having value orientation throughout the year is gonna be important,” Timm said, acknowledging that the middle-income customers Kohl’s serves are facing a stretched budget in today’s economic environment.
Kohl’s Sephora Partnership Drives Success
One investment that has proven successful for Kohl’s is its partnership with Sephora. Timm reported a 6% year-over-year increase in sales from Sephora in the first fiscal quarter, and the company is on track to open Sephora stores within all of its nearly 1,200 locations by the end of the year. As of now, over 1,100 stores already feature Sephora shops.
“This spring, we will open 105 Sephora small format shops, which completes the full chain rollout of Sephora at Kohl’s,” Timm confirmed. The beauty partnership has been a significant driver of success, with Kohl’s building a nearly $2 million beauty business in just four years.
Challenges and Changes at Kohl’s
Kohl’s continues to navigate a challenging retail environment. The company recently made headlines with the firing of former CEO Ashley Buchanan over alleged conflicts of interest involving vendor transactions. In addition, Kohl’s has been closing underperforming stores, with 27 locations in 15 states slated for closure by the end of April. The retailer also eliminated a popular “returns” perk that had been in place for eight years, leaving some customers frustrated.
Despite these setbacks, Kohl’s is adapting to changing market conditions and working to improve its offerings and customer service.
