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Kohl's Corporation (KSS)

Q3 2025 Earnings Call· Tue, Nov 25, 2025

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Transcript

Operator

Operator

Good morning, and welcome to the Kohl's Corporation Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I'd now like to turn the call over to Trevor Novotny, Director of Investor Relations. Thank you. Please go ahead.

Trevor Novotny

Analyst

Thank you. Certain statements made on this call, including those regarding our projected financial results, business outlook and future initiatives are forward-looking statements. These statements are based on current expectations and assumptions and are subject to certain risks and uncertainties that could cause Kohl's actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, the factors described in Item 1A of Kohl's most recent annual report on Form 10-K and as may be supplemented from time to time in Kohl's other filings with the SEC, all of which are expressly incorporated herein by reference. Forward-looking statements relate to the date initially made, and Kohl's undertakes no obligation to update them. In addition, during this call, we may refer to certain non-GAAP financial measures. Please refer to the cautionary statement and reconciliations of these non-GAAP measures included in the investor presentation filed as an exhibit to our Form 8-K, as filed with the SEC and available on our Investor Relations website. Please note that this call will be recorded. However, replays of this call will not be updated. So if you are listening to a replay, it is possible that the information discussed is no longer current, and Kohl's undertakes no obligation to update such information. With me this morning are John Schlifske, our Independent Chair of the Board; Michael Bender, our Chief Executive Officer; and Jill Timm, our Chief Financial Officer. I will now turn the call over to John.

John Schlifske

Analyst

Thank you, Trevor, and thank you for joining us this morning. I will be providing some brief introductory remarks, and then I'm going to turn it over to Michael and Jill to go over our third quarter performance, and then we'll take some Q&A. As announced yesterday, the Board has appointed Michael Bender as Chief Executive Officer of Kohl's. Michael is a seasoned retail veteran who has a deep understanding of Kohl's business, serving as a Board member since 2019 former Chair of the Board and most recently as Interim CEO since May. In addition to his Kohl's experience, Michael brings over 30 years of senior leadership experience across the retail and consumer goods industries. Over the last 6 months, the Board has gone through an extensive search process to identify our new CEO, and we could not be more thrilled to have Michael as the next leader of this company. There's been a lot of change over the last year at Kohl's, and Michael has proven to be an effective leader, fostering a strong culture and providing stability through the transition. Additionally, during this time as interim CEO, Michael has made important strategic decisions addressed key areas of opportunities and helped deliver progressive improvements to the business. Kohl's has a solid foundation for the future, boasting over 1,100 stores in a vast digital platform that serves more than 60 million customers each year. We have the utmost confidence that Michael is the right leader for this company, and we're excited about the substantial opportunity that can be realized under his leadership. On behalf of the Board, I'd like to congratulate Michael on his new position. We look forward to supporting him and the management team in this next chapter. With that, I'll now turn the call over to Michael.

Michael Bender

Analyst

Thank you, John, and good morning, everyone, and thank you for joining Kohl's third quarter earnings conference call. I'm honored to assume the role as Chief Executive Officer of Kohl's, and I would like to thank John and the Board for giving me the opportunity to lead this great company. Since I joined the team in May, I've been deeply impressed with the Kohl's team, their resilience and their motivation to win. My commitment is to lead this organization, our associates and our customers. Every day, Kohl's has the privilege of serving millions of customers, and we will continually strive to enhance their experience and meet their evolving needs. I'm excited about the opportunity that lies ahead and look forward to repositioning Kohl's for future success. Now during our call today, I'd like to discuss three items with you. First, discuss our third quarter performance; second, highlight the progress we're making against our 2025 initiatives. And lastly, give a brief overview of how we are positioned for the Q4 holiday season. Let me start with our third quarter results. We are pleased as we delivered both top line and bottom line performance ahead of our expectations for the third consecutive quarter. These results directly reflect the progress we're making against our 2025 initiatives, which are building momentum and continuing to resonate with our customers. While we are encouraged with the progressive improvement we're making, we want to acknowledge that this performance is not representative of where we aspire to be. Our team is working diligently to further execute against these 2025 initiatives to deliver quality products, great value and a frictionless experience to our customers. Looking deeper into our top line performance, our comparable sales performance continued to improve as we ran down 1.7% in the third quarter. We started…

Jill Timm

Analyst

Thank you, Michael. For today's call, I'll provide additional details on our third quarter results and give an update on our fiscal year 2025 guidance. Net sales declined 2.8% in the quarter and 4% year-to-date. Comparable sales declined 1.7% in Q3 and declined 3.2% year-to-date. The third quarter improvement was mainly driven by an increase in transactions versus prior quarter, while our average transaction value remained flat year-over-year. In addition, proprietary brands ran a positive comp in the quarter with business accelerating as the quarter progressed. Digital sales outperformed stores again in Q3 and grew by 2.4% versus last year. This performance was driven by an increase in traffic throughout the quarter going from high single digits in August to high teens in October. From a customer perspective, we saw significant improvement in our Kohl's card customers, which were down high single digits in Q3, an increase in trend of over 500 basis points in the last quarter with the improvement coming from both the store and digital channels. Moving down the P&L. Other revenue, which primarily consists of our credit business, was $168 million in Q3, a 17% decline compared to last year. As a reminder, we launched our co-brand credit card last September, so on a comparable basis, starting this quarter, we are no longer receiving the incremental benefit seen in the first half of this year. In addition to this, we continue to face a headwind as we shifted some credit-related expenses from SG&A into other revenue. While our Kohl's Card still remains pressured, we made meaningful progress reengaging this customer throughout the year. We remain committed to furthering this progress as we continue into Q4 and next year. Gross margin in Q3 was 39.6%, an improvement of 51 basis points versus last year. This year-over-year improvement…

Operator

Operator

[Operator Instructions] Our first question comes from Chuck Grom from Gordon Haskett.

Charles Grom

Analyst

And first of all, congrats, Michael on the new responsibilities. At a high level, I'm just curious, as you guys add back brands to the coupon eligibility list and make changes to the store layout and bring more of the prop brands back, how you're connecting with former and lapsed customers to make them aware of the changes? And where do you think you are, I guess, on that recovery path at this point in time?

Jill Timm

Analyst

I think, Chuck, we have -- the good news is with our core customers, they were still shopping us, we just lost some of their trips. So we have a lot of data around that customer. We know what they like to shop with. We know when they shop. So our marketing team has been able to use a lot of that data to go after them from a marketing perspective. I would say that's been ramping up because as we've been bringing back in the items into the coupon, as we've been bringing the proprietary inventory back into our stores. We want to make sure when we did invite them in, that we were in stock and the items that they were looking for. Similarly with the jewelry brand and Petites coming in because they actually over penetrated into the brand -- those brands as well. So this past quarter, we did some personalization in terms of coupons. We know that resonates really well with them and actually made it in Kohl's cash as well. So we took away the exclusion headwind from that perspective as well. And we've really seen high engagement from that. So we're pleased with the trend improvement we've seen in the Kohl's charge customers up 500 basis points in the quarter. But clearly, we still have room to continue to move forward. And I think as we bring back in those brands, we continue to market to them, we're going to get more of their footsteps, particularly during this key holiday period.

Michael Bender

Analyst

And Chuck, I would -- just to add that the difference that we see between both the brick-and-mortar and the digital side of that question that you're asking, we see a more immediate response on the digital side. Obviously, when we're able to communicate the brands that are back in the coupon. From a store perspective, we're still building that and we're doing things like making sure that when there's an item in a store that is coupon eligible that we're placing a sign, for example, on the fixture that says this item now coupon eligible, that will -- that ramp-up will take a little bit more time than what you see from a digital perspective. But we're excited, as Jill said, about the progress that we're making there and unifying those efforts.

Operator

Operator

Our next question comes from Paul Lejuez from Citigroup.

Paul Lejuez

Analyst

Joe, can you maybe break down that $1.3 billion of operating cash flow. Just talk about the net income versus the onetime items versus working capital benefit within that? And then maybe if you can talk about CapEx, I think you said $400 million this year. How should we think about a CapEx number over the next several years? And then I just wanted to make sure I understood the traffic versus ticket in terms of the drivers of the comp this quarter. I think maybe you said what happened versus last quarter. I'm just curious on an absolute basis year-over-year. What the drivers of comps between traffic and ticket.

Jill Timm

Analyst

Sure. So I think, first, obviously, $1.3 billion in operating cash flow, we feel really good with the momentum that we've made there in addition to paying off over $700 million on the revolver. So we'll clearly have an exit plan for that by the end of the year. I mean, a big portion of what you're seeing, we did have the onetime gain, as you alluded to, which is about $100 million that we recognized last quarter, but the majority of this cash flow is coming through our strong inventory management. And I think that's the big thing. Inventory down 5%, on the quarter where we were down 1.7% from a comp perspective. We continue to expect to manage our inventory down in that low to mid-single-digit number. So I think that's really where we're seeing. We had a better flow of goods coming into Q3 this year, which we do believe helps accelerate our business as the quarter progressed, and we continue to flow those goods I think more timely has been helpful to us, but it's also been beneficial from a cash flow perspective. So I think I would really narrow it down to inventory management being a key unlock and we expect that to continue. We have opportunities to turn faster as an organization. We've had this conversation and the faster return, the more we can generate from a cash flow perspective. So I feel very confident that this is a level of cash ex the onetime that we can continue to operate at. From a CapEx perspective, at $400 million, obviously, we completed the Sephora rollout. We accelerated the Impulse lines given the fact that they were working so well in the front half of the year, we really leaned into them and to get them in almost all stores by the back half of the year. It's really an extra unit in the basket outsized impact in the stores. As we go into next year, I'd suggest that our level will probably be in that $350 million to $400 million range. Obviously, we'll ebb and flow based on any big products. And if we have a big new project to lay out, we would obviously call that out separately, but I think that's a good run rate to use as we move forward. And I think the third question from a traffic and ticket perspective, our average transaction value is relatively flat. So the difference for the quarter from a comp perspective is really about traffic, but also the improvement from last quarter and that down 4% to the down 1.7% was all about improved traffic. And the improvement we saw throughout the quarter with October actually getting to a positive comp with all driven by improvement in traffic. So those trends have continued to improve, helping drive the momentum that we've discussed.

Operator

Operator

Our next question comes from Mark Altschwager from Baird.

Mark Altschwager

Analyst

Congratulations, Michael. Michael, which of the strategic initiatives outlined at the start of the year are showing the most promise? And how are you evolving the strategy to stabilize comps based on the learnings year-to-date?

Michael Bender

Analyst

Yes, thanks for the question. Of the three initiatives that we started out with, I would say that one of the ones that I'm most proud of in terms of the progress that we're making is around this notion of building a more balanced assortment. We've focused a lot of attention over the last, call it, 6 to 9 months on making sure that what we're offering to customers, particularly from a value perspective is what they're looking for. And Kohl's has historically been known for being able to offer choice, but also depth so that there's Trip Assurance. That's the piece that we underscore quite a bit about making sure that that's what we're known for. So if you take categories like in women's dresses intimates, there's been an awful lot of work done in those two categories in particular to reset and edit some of the choices that we've had and make sure that the depth is available for our customers. So there's still work to be done in that instance. But we feel really good about that work. I would say secondly, the -- in general, the focus on proprietary brands and making sure that we're bringing those forward and achieving -- I'll say, what is the proper mix. And again, we don't have a target, but we have a customer-led mindset about where we need to be with proprietary brands. The curation of that assortment has been a big positive for the business, as Jill noted, in terms of the progress that we're making and the performance that we're seeing from our efforts there. And it dovetails nicely into being able to support opening price points for customers who are pressured these days. And so it marries nicely with where the customer mindset is right now. Those are a couple of areas that I would focus on.

Mark Altschwager

Analyst

That's great. And so do you think you have the pieces in place to deliver top line growth as we look into 2026? And then separately as a follow-up for Jill. How should we think about the further opportunity for cost savings on the SG&A line and the ability to sustain SG&A dollars down year-over-year over the next several quarters?

Michael Bender

Analyst

Mark, I would say on your question about our trajectory toward growth. Clearly, that's what we talk about on a daily basis here internally. I think the performance that we've shown consecutively now over the last three quarters of the progression toward growth is an indicator like that, the kinds of things that we're focused on delivering on behalf of the customers is what we should be working on. I don't like to put a timetable on it and say, on April 21, that's when you'll see growth. But we've shown in October, I think, is a good example of -- we have the ability to get to a positive growth trajectory in the business. And that's what we're doing every day in the work that we're advancing here.

Jill Timm

Analyst

And then from a cost perspective, I think we have a history, I think, of managing our business with good cost discipline. Obviously, our cost being down 2% in the quarter on the down 1.7% comp. So we continue to find ways to be much more efficient. I think this is just instilled in our organization, and it is something that we are constantly looking for is how can we do things more efficiently more productively, how can we leverage technology in what we're doing, day in and day out. We've introduced a lot of new technology, whether it be within our new e-fulfillment centers within our stores to help us have those efficiencies. So I feel like the model and the discipline that has been established within the organization will help us continue to sustain that cost discipline. I think the variable model we run runs really well. So if we get to positive growth, we should be adding those expenses in to support that as well. So I think that's the model. As you know, we think we can leverage typically around that 1% comp. We've done better than that this year as we've really known we needed to tighten so we could open up funds to help us continue to drive into the initiatives that we've outlined to really help drive the progressive improvement you see on the top line.

Michael Bender

Analyst

And Mark, I would just say in answering your earlier question a little bit further to around what's going to help us get to a positive growth trajectory. We spend a lot of time inside the business since I've been on board, focusing on product. And making sure that that's at the center of how we actually drive the business. We do well with promotions. We have that down. But -- to the extent that there is a focus on product and making sure that we are both relevant, styles are right, and it speaks to the customer in a compelling way, that's where we've been spending a lot of time making sure that we're focusing our efforts in that regard. And that is one of the things -- one of the big things that's helping us show some of the results that we're speaking about today.

Operator

Operator

Our next question comes from Bob Drbul from BTIG.

Robert Drbul

Analyst

Michael, congratulations. On the -- Jill, a question for you. On the gross margin side, when you think about sort of the fourth quarter and I think just when you generally look at some of the adjustments and changes that you're making to the promotional cadence and exclusions, can you just talk us through like the bigger drivers of your outlook and how you think about the opportunities with private brands, et cetera, contributed?

Jill Timm

Analyst

Sure. I think, obviously, first, if I start with where we were in Q3, up 50 basis points we really benefited one, from the inventory management I spoke to, by flowing goods more current and trend right, we're able to have a better reg selling price. That will continue as we move into Q4. Also, we benefited from mix in a couple of different ways. One, our proprietary brand portfolio running a positive comp in that side of the business, obviously, has an outsized impact to our margins to the good side. Second, if you underlook the categories from a home perspective, we knew electrics would underperform. We knew that there was going to be some pressure there and brought that down based on our elasticity analysis of where prices were moving. But we overperformed in our soft home, which has a better margin structure for us. So overall, we start seeing mix really benefiting us. I think those things will continue to persist as we get into Q4. A couple of the headwinds, which is why we guided that margin a little softer than you saw in Q3. One is digital becomes a bigger portion of our business in Q4. So we will have added pressure from a cost of shipping perspective. And then we also expect it is a highly promotional time. We know that we have a low and middle income customer that are going to be more choiceful and they're really seeking value. So we wanted to be set up so we could have that ability to really lean into value and our promotions during that time of year to ensure that we are meeting the customer where they needed to be met and also grabbing those sales from that customer, particularly that core credit customer, who loves the deal.

Robert Drbul

Analyst

Great. And I just had a question on the -- I guess, on the debt and with the progress you made on the revolver. Can you just talk us through sort of rebuilding the cash balances like how you think about your debt position at this point? And any sort of targets as you think about heading into '26?

Jill Timm

Analyst

Yes. First, if I look at just the debt outstanding, I think we're about $1.5 billion of debt outstanding. So I actually look at our net debt leverage at about 1.2x. Obviously, our leases, which, as you know, we had to reset a lot of our leases when we put in the Sephora shops in all of our stores. So when you add in the leases, that's what really brings our leverage ratio up. And if I break that into two pieces, we're really signed in for our first term of an extended lease payment, which averages about 4 years. So if you add that back in, it brings our lease leverage ratio to about 2.6x, but then when you add in the extended term, which is what we're using on our balance sheet because that's what we're depreciating our asset over is what brings you to the 4.5x leverage. So I actually feel very good with $1.5 billion outstanding. We just refi-ed our long-term debt. We have nothing coming -- we don't have a stack coming due for 5 years. And as you saw, we deleveraged our balance sheet by about $700 million from last year. We'll be completely out of the revolver by the end of this year, which gives us additional liquidity of $1.5 billion as well. So I feel very well positioned from a balance sheet perspective. And then as we talked about, generating $1.3 billion of operating cash flow, really benefiting from that inventory management, which we think will be a continued benefit for us into 2026 as well.

Operator

Operator

Our next question comes from Oliver Chen from TD Cowen.

Oliver Chen

Analyst

Hi, Michael and Jill. On the progress you've made how might you rank order some of the progress in terms of the opportunities on that positive comp opportunity with categories and/or strategies. Also was credit card income in line with what you expected and anything we should know in terms of making sure we model that correctly going forward? And then on the topic of speed in the organization, what's ahead for driving that? I know it's critical for merchandising and there's lots of AI opportunities and the demand volatility has been unprecedented. Kohl's Cash is also iconic. And I know that program has been an opportunity to simplify. But any updates there as well.

Michael Bender

Analyst

Great. So that's four questions in there. We'll try to address those, Oliver. The first one, in terms of rank order of the growth in the initiatives work, I would say that again, the focus that we've had on getting the assortment right, I rank as probably at the top of the list. Inclusive in that, as I had mentioned, around proprietary brands and getting the mix between national and proprietary brands in a better place. I feel like we've made some really good progress on that front. Reassorting ourselves in terms of the style and relevancy of the product and the focus that we have there, I spent a lot of time myself with the teams, particularly on the women's side of the business since I've been on Board because as you know, women's here at Kohl's drives Kohl's. So -- that's been the focus for me in the first, call it, a couple of months or so of really digging in with the merchant organization. I would say also that what you should see going forward from us and what I'm excited about also, you saw that we hired in the last three months or so, the new CTO, Steve Dee, as well as new Chief Digital Officer, Arianne Parisi, and building out an experience that's truly omnichannel and to your point, modernizing the business. They have leaned in very quickly both of them on helping us think through from a more commercial standpoint, what needs to happen in the business from that perspective. So those are a couple of areas that I would highlight in answering that first question that you have on. Jill, you want to take credit and...

Jill Timm

Analyst

Sure. From a credit perspective, it didn't come in where we expect it to be. Obviously, we guided it down as we lapped the launch of the co-brand last year. You can see in the implied guide that it will get slightly better in Q4. What I would say is our Kohl's Card customer sales did improve that 500 basis points. But as you know, it just takes a little bit of a lag for that AR to build and then revolve. So it's always going to be lagged based off performance before it hits into that credit line. The other thing I would call is our payment rates do remain above last year. So that comes back into not building as much from an AR perspective and also a little bit less late fee income. And then although our loss rates are elevated, we actually did see them down slightly in Q3. So I feel pretty good with the health of the portfolio. It's really just continuing to get that credit card customer coming in, shopping and letting their balances revolve to bring that back in. So we are expecting a little bit of the benefit into Q4, and then you should see more of that benefit as we enter into 2026, just given the lag of how that credit line runs. I think from a Kohl's Cash perspective, I mean, you nailed it. It is iconic. We did actually celebrate our Kohl's Cash anniversary and put a whole event around it during this quarter, which was great. I think, hopefully, you saw that Oliver out on our social media because it was well attended by many as we are giving out some Kohl's Cash gifts and people really love what that looks like. As we move into the holidays, we'll continue to leverage this as well. We have events planned around it. It's a way for us to get around. Obviously, it could be used in everything. So there is no exclusions. You earn it, you can come back and redeem it. People love to earn it on gifts that they're giving and use it on a self-gift during the holiday period. So I think this is definitely something that has set Kohl's apart and really resonates with both our Kohl's Charge and non-Kohl's Charge customer. And so our marketing team has done a really great job of exploiting that.

Oliver Chen

Analyst

Okay. I had a follow-up, Michael, the company has been on this journey with merchandising in the past and differentiation has been important in making sure the brands don't all seem the same or trend right. I guess what's different this time? Or what are your plans in terms of what's going to be distinguished? And that should be a really easy compare. What should we know about the compare versus momentum, but it's a compare nonetheless? Sephora being negative, was that -- I know that business is remarkable, but was it a surprise that it was negative? BD has been overall pretty vibrant.

Michael Bender

Analyst

Yes, I'll take the Sephora question. Jill, please chime in too if there's more to say about it. But the Sephora business is something that we're really excited about. As I've mentioned in the past, it's approaching a $2 billion business for us over a 4-year time period, and we feel good about the progress that we're making there. We've mentioned in the past that with this being now a 4-year-old business, you see similar to how a store matures that business looking that way in some cases. But Sephora also, as we've mentioned, has an incredible pipeline of opportunity to bring newness and innovation. We mentioned MAC coming in spring of next year. Those are the kinds of things that will continue to fuel the growth of that business, and we feel very good about where Sephora sits. I have no concerns at all about that at all.

Jill Timm

Analyst

And I think in terms of where you're talking about updates from a branding perspective, I think the big thing, and Michael called this out a couple of times is we're really listening to the customer. So moving back into proprietary brands, we are a void of an opening price point, Oliver, in our store, and our customer came to look for value. They came to look for the brands that they had known at Kohl's and they couldn't find that on the floor. So we're making that investment back into our proprietary brands, but we're doing it in a really thoughtful manner. We're not over-correcting. Our inventory last year in Q3 and proprietary brands was down about 30%. This year, we're up about 11%. So still on a 2-year stack basis, we're down, but we're making those moves and making the right investments. And we're doing that in a better timely manner than what we have seen in the past. We are also editing out some of the redundancy we're seeing on the floor so that these brands can stand out more. We've made reductions so that we can have from a dress perspective, we can have a really great dress assortment, but we're going to do on half the racks that you've seen in the past because that's really what the customer was shopping and we saw our most productivity out of it. We're starting to make some of those adjacency analysis and making those moves within our store. We've talked a lot about accessories and juniors. We know there's more to come from that as well. So how can we take advantage of what we know the customer is putting in their basket and what could be that next item that they're looking to purchase for as…

Operator

Operator

Our next question comes from Dana Telsey from Telsey Group.

Dana Telsey

Analyst

Congratulations, Michael, and nice to see the progress. Obviously, a lot of talk about proprietary brands in the progress and enhancements being made there. Certainly seems like women's is the core. Any other brands you would call out or categories that you would call out on proprietary to watch for that can be meaningful. And what does it mean at all if anything changes on the tariff side. Jill, what does that mean to margins? How are you thinking about it? And then just brand inclusion in coupons, are you done with that? Where are you on the coupon cycle with brands?

Michael Bender

Analyst

I'll start with that first question, Dana. In terms of the bucket of coupon inclusions, I think for now where we want to be, we've done two tranches, a big one back in April and the latest one in August, and we feel good about the progress that we're making there and what we're seeing from customers, particularly as it relates to the Kohl's credit card customer. Mouthful. And that's one of the things that we're excited about in terms of what we're seeing there. As far as other brands or categories that we see, for me, there are several, but one that I'll highlight would be in the active side, both tech and Flex are areas that are important for us. We mentioned earlier in the comments about the fact that we feel so good about Flex that we've extended into kids in 300 stores. There'll be 300 more in the spring and then a full almost every store by June of next year is where we're headed with that. So those are -- that's an example of the kinds of things that we're focused on in terms of additional focus on proprietary brands and extending it outside of the categories that we currently have.

Jill Timm

Analyst

And then your question on tariffs, Dana, I think, obviously, this quarter, we did well. I think it had less of an impact. So I really want to give a shout out to our merchant and sourcing teams. They've done an incredible job navigating this dynamic environment and letting it really add up in a great place in terms of how we showed our margins. We do expect that this will be a little bit more pressured as we go into Q4 and into 2026 first because we'll have a full year of this exposure. And also, I think just there's more certainty around what these tariffs mean. So we're going to have a little bit more pressure as we do move into '26, but we feel good with our ability and how we've offset them to date. I just think with the certainty, we're going to see a lot more movement there as we go into 2026, both with our proprietary brands and our national vendors.

Dana Telsey

Analyst

Got it. And just one last thing, if it hadn't been mentioned. Anything on the store portfolio, how you think about openings, closings, relocations going forward?

Michael Bender

Analyst

Yes. I would just say that that's a normal hygiene practice for us to review our store fleet. The good news is that the vast majority of our stores, well over 90% are profitable and productive for us. And so as we do at the beginning of every year, we'll take a look at our stores. And if we deem there to be any necessary adjustments, we'll make that. But as we did last year in closing 20 or so stores, we'll take a look, but that process is underway. Yes.

Operator

Operator

We are of time for questions today. This will conclude today's conference call. Thank you for your participation. You may now disconnect.