Kohl’s is aggressively resizing its real estate footprint and tightening its logistics network as part of a broader effort to sharpen profitability and strengthen long-term growth. The retailer announced plans to shutter 27 underperforming stores by April and to close an e-commerce fulfillment center in San Bernardino, California, when its lease expires in May. The move signals a continued emphasis on efficiency, technology-enabled fulfillment, and a closer calibration of store and distribution assets to match shifting consumer behavior and demand patterns.
Kohl’s store closures and timing
Kohl’s has laid out a plan to close 27 stores that it identifies as underperforming, with closures targeted to be completed by April. In addition to the in-store reductions, the company disclosed that it will terminate the lease on a San Bernardino, California, e-commerce fulfillment center, with the shutdown slated for May. The scale and pace of these closures underscore the retailer’s commitment to streamlining its physical footprint while preserving core capabilities that support online shopping and omnichannel fulfillment.
The decision to shutter these locations comes as Kohl’s continues to pursue a long-term growth strategy that emphasizes efficiency, capital discipline, and a healthier store portfolio. In commenting on the closures, Kohl’s outgoing CEO Tom Kingsbury stressed the seriousness with which the company regards these actions, noting that difficult but necessary steps are being taken “to support the health and future of our business for our customers and our teams.” The tone reflects a broader push across the department store sector to align store networks with evolving consumer demand, digital shopping trends, and the overall cost structure of running a national footprint.
As part of the closures, the company highlighted that the 27 stores represent a relatively small portion of Kohl’s total portfolio, which exceeds 1,150 locations nationwide. The closures coincide with ongoing efforts to optimize logistics and distribution in concert with a broader corporate objective of improving profitability and cash flow. The company has indicated that it intends to redeploy capital and resources toward more productive locations and to leverage technology-driven capabilities to maintain service levels for customers even as certain physical locations are retired. The strategic rationale centers on maintaining a competitive, cash-generative fleet while pruning operations that do not meet performance benchmarks.
In parallel with the store closures, Kohl’s has reserved severance and internal mobility options for affected associates. All associates at the affected stores have been informed and offered severance packages or the opportunity to apply for other open roles within Kohl’s network. This approach reflects a structured transition plan designed to minimize disruption for employees while ensuring continuity of service for customers and communities that rely on Kohl’s stores.
Geographically, the closures are concentrated in several markets, with California bearing a notable share. Specifically, ten of the 27 shuttered stores are located in California. A separate WARN notice system disclosed that 239 employees will be laid off across four of the California sites, including locations in San Diego, Sacramento, Westchester, and Pleasanton. The geographic distribution suggests a broader evaluation of where Kohl’s can most effectively operate within a more focused and leaner real estate framework. Beyond California, other closures are individualized by state, with Virginia, Ohio, and Illinois each hosting two closures apiece, and one store set to close in Alabama, Arkansas, Colorado, Georgia, Idaho, Massachusetts, New Jersey, Oregon, Pennsylvania, Texas, and Utah. This mix illustrates a targeted approach to pruning underperforming markets while preserving a robust national footprint for customer access and omnichannel fulfillment.
In sum, the store-closure initiative forms a central pillar of Kohl’s broader cost optimization and strategic repositioning, aligning the physical network with a more digital-friendly operating model and a tighter, more productive real estate portfolio.
San Bernardino fulfillment center and the broader fulfillment network
The San Bernardino facility, a 575,000-square-foot operation that has been part of Kohl’s network since 2010, plays a meaningful role in the company’s nationwide supply chain. It sits within a broader network of 15 fulfillment and distribution centers designed to support fast, accurate order processing and delivery to customers across the United States. Kohl’s has explained that over the past several years it has invested in efficiency enhancements at newer fulfillment facilities, including the deployment of technology-driven capabilities and the expansion of its ability to fulfill customer orders from store locations.
These modernization efforts have helped Kohl’s maintain robust fulfillment capabilities even as the San Bernardino facility is slated for closure. The company contends that the enhancements at newer facilities, combined with a more flexible and responsive network that leverages store-based fulfillment options, have reduced the dependency on the San Bernardino site. As a result, Kohl’s argues that it can continue to fulfill online orders and meet customer delivery expectations without the San Bernardino center, thereby supporting the continuity of service through a streamlined network architecture.
The planned closure of the San Bernardino fulfillment center has tangible implications for the company’s logistics strategy and workforce. The WARN notice indicates that 690 employees will be laid off on March 28 in connection with the closure, underscoring the real-world impact of a network reconfiguration on people and communities. This reduction is part of a broader industrial reorganization that aims to consolidate capacity, optimize flow, and minimize costs while preserving the ability to deliver online orders, ship merchandise to stores, and fulfill omnichannel requests efficiently.
In a related industry context, the move mirrors similar actions by other department stores seeking to recalibrate logistics footprints in response to shifting demand and cost pressures. For instance, retailers have explored variations of centralized versus decentralized fulfillment, automation-driven processing, and increased reliance on highly automated facilities to boost throughput, accuracy, and speed. Kohl’s emphasis on technology-enabled fulfillment aligns with industry trends that favor scalable, flexible networks capable of supporting omnichannel shopping, in-store pickup, and efficient last-mile delivery—with the San Bernardino facility moving from a pivotal hub to a more centralized, consolidated role within a streamlined network.
WARN notices and the geographic spread of impact
The announced closures carry meaningful implications for employees across impacted sites. The WARN (Worker Adjustment and Retraining Notification) notice filed in connection with the San Bernardino closure confirms that 690 employees will be laid off on March 28. The California-focused closures reflect a broader pattern of distributed job impacts, as the company delineates a careful, market-by-market approach to workforce reductions in tandem with store and facility closures.
A closer look at the geographic footprint reveals a mix of state-by-state effects. Ten of the 27 stores slated for closure are located in California, highlighting a concentration of reductions within a single high-density market. Beyond California, WARN notices indicate that layoffs will be distributed across several other markets: 239 employees across four of the San Diego, Sacramento, Westchester, and Pleasanton locations will be affected. Additional closures will occur in Virginia, Ohio, and Illinois, with two shuttered stores in each of those states. Separate individual closures are planned in Alabama, Arkansas, Colorado, Georgia, Idaho, Massachusetts, New Jersey, Oregon, Pennsylvania, Texas, and Utah—each with one store affected.
The geographic spread of closures underscores Kohl’s strategy of balancing performance-based store reductions with the imperative to maintain a national footprint capable of serving a diverse customer base. The closures are not isolated to a single region; rather, they reflect a comprehensive evaluation of where the business can generate sustainable cash flow and maintain service levels across its omnichannel ecosystem. The combination of store closures and associated layoffs points to a period of restructuring aimed at improving overall profitability and reducing the cost base associated with underperforming locations.
From an operational perspective, the closure plan affords Kohl’s the opportunity to reallocate labor, real estate capacity, and capital to higher-performing assets and to optimize the mix of stores, distribution centers, and fulfillment capabilities. The layoffs will likely necessitate internal transitions for workers—potentially including transfers to other open roles at Kohl’s or separation packages—while the company continues to emphasize its customer-centric, multichannel service model.
Industry context: parallels with Nordstrom and Macy’s
Kohl’s store and facility closures come amid a broader wave of logistics and real estate optimization across the department store sector. In a parallel development, Nordstrom also took steps to streamline West Coast fulfillment operations by shuttering a San Bernardino facility in mid-2024. The retailer redirected a large portion of its online and omnichannel fulfillment to its Riverside, California, facility—a heavily automated 1,000,000-square-foot center—while eliminating plans for a Pacific Northwest omnichannel fulfillment center as part of a broader West Coast consolidation strategy. The Nordstrom actions illustrate how pressure on supply chains, e-commerce acceleration, and the need to optimize distribution networks are influencing strategic decisions beyond Kohl’s.
Meanwhile, Macy’s has signaled a comparable rethinking of its logistics and distribution network as part of a broader plan to cut approximately $235 million in supply chain costs by the end of 2026. Macy’s has indicated that it would close multiple distribution centers with higher processing costs as part of this cost-reduction effort, though it has not yet shuttered any of its existing 25 distribution centers. Collectively, these actions illuminate a sector-wide emphasis on supply chain optimization, with many operators pursuing a mix of store rationalization, distribution-centre consolidation, and enhanced omnichannel capabilities to bolster efficiency and margins.
Kohl’s layoff and store-closure plan also illustrates a broader trend in the department store landscape: the fleet size is not shrinking uniformly, but the composition is shifting toward more productive, higher-return locations. While Kohl’s stores account for more than 1,150 locations nationally, the planned closures are intended to remove underperformers and repurpose resources to strengthen the overall business model. In contrast to Kohl’s slower store-reduction pace, Macy’s has publicly disclosed plans for larger-scale consolidation within a multi-year framework. This juxtaposition underscores the diversity of strategies within the same sector as retailers strive to respond to evolving consumer demands, rising operating costs, and the pressure to maintain a robust online-to-offline shopping experience.
The industry context also highlights the importance of balancing physical presence with digital execution. The trend toward streamlined distribution networks, store-within-store fulfillment, and greater use of automated facilities aligns with broader retail dynamics, including heightened online demand, mixed-channel shopping, and the need for more precise inventory control. Kohl’s and its peers are navigating these dynamics through a combination of closures, relocations, and technology investments designed to preserve service quality while improving profitability across the value chain.
Leadership changes and strategic direction
Kohl’s is navigating an executive transition concurrent with its store and facility rationalization. The company’s outgoing CEO, Tom Kingsbury, is preparing to depart from the role on January 15 after a tenure that spanned roughly two years. As the leadership transition unfolds, Ashley Buchanan, currently serving as Michaels’ CEO, is expected to assume the top position at Kohl’s. Kingsbury will remain with the company in a board capacity until his contract concludes in May, ensuring continuity and counsel during the critical period of real estate and logistics optimization.
In the earnings context, Kohl’s chief financial officer Jill Timm provided perspectives that align with the broader strategic shift. In a November earnings call, Timm indicated that the company may reduce its physical footprint, signaling a willingness to pursue “hygiene” moves that keep the portfolio lean while maintaining a strong store base. She noted that the vast majority of Kohl’s stores—more than 90 percent—are cash-positive on a four-wall basis, implying that a minority of locations—approximately 10 percent—are currently generating negative cash flow. This framing underscores the challenge of balancing ongoing profitability with a store network intended to support omnichannel capabilities and customer access across markets.
Timm’s comments suggest that Kohl’s will continue to evaluate its footprint to optimize the fleet. The emphasis on “hygiene” adjustments signals a preference for surgical changes that improve efficiency without destabilizing the core operating model or eroding the customer experience. The company’s leadership team has stressed that strategic decisions will be grounded in financial performance and the need to preserve a durable, customer-focused retail platform in a competitive, rapidly evolving marketplace.
Financial performance and market conditions
Kohl’s has faced a challenging financial backdrop in the period surrounding these real estate actions. In the third quarter, net sales declined by 8.8 percent year over year, reflecting continued pressure on top-line performance. Comp-store sales declined even more steeply, falling by 9.3 percent, marking the 11th consecutive quarter with negative same-store performance. Net income for the period dropped sharply, by 63 percent, to $22 million, underscoring the margin headwinds and the need for ongoing what-if scenario planning around store viability and cost structure.
The company’s positioning as a partner to Amazon and Sephora adds complexity to its financial picture. Kohl’s has underscores a relationship with these well-known brands, which can influence traffic and category mix, but also imposes varying economics and capital needs. In the context of store closures and facility consolidations, the earnings trajectory and cash-flow dynamics become even more critical as Kohl’s seeks to stabilize profitability and sustain investments in omnichannel fulfillment, technology, and store remodels that may be needed in the future.
In this environment, CFO commentary highlighted the nuanced balance between reducing the physical footprint and maintaining a productive store network. The emphasis on potential “hygiene” moves suggests ongoing discipline around cost reduction and asset optimization, with management signaling that the company will continue to review its operating footprint in light of performance metrics and strategic objectives. The leadership transition compounds the importance of a stable financial framework as Kohl’s aligns its business model with shifting consumer patterns, elevated cost pressures, and the need to deliver consistent returns to shareholders while preserving long-term growth opportunities.
Operational implications and customer impact
The store-and-fulfillment network adjustments at Kohl’s carry tangible implications for customers, employees, and partners. For shoppers, the closures and network realignment may influence store proximity, inventory availability, and the speed with which orders placed online can be fulfilled or picked up across channels. Kohl’s has stressed its ongoing capability to fulfill customer orders from store locations in tandem with its newer, technologically enhanced fulfillment facilities, indicating that customers may experience continued service levels even as certain facilities and stores exit the network.
For employees, the closures translate into job losses at affected stores and within the closed fulfillment center. The WARN notices confirm the scale of layoffs, and the company has indicated severance packages or internal mobility options as part of its transition plan. The closures also have ripple effects on communities that hosted these stores and facilities, particularly in markets where Kohl’s had a meaningful local footprint. The human impact of such consolidations often includes temporary employment disruption, retraining opportunities, and potential shifts to positions in other stores or distribution hubs, depending on the broader labor market and internal redeployment opportunities.
From an operational standpoint, Kohl’s is reinforcing its omnichannel capabilities to maintain customer convenience. By leveraging store-based fulfillment and investments in automation and technology at newer facilities, the retailer aims to preserve fast fulfillment, efficient online order processing, and the ability to deliver a seamless shopping experience across channels. The strategic emphasis on technology-enhanced distribution supports a more flexible network that can accommodate fluctuations in demand, seasonality, and regional variations in consumer behavior.
Strategically, these moves reflect a broader industry emphasis on capital efficiency and portfolio optimization. Retailers are recalibrating real estate holdings, consolidating distribution assets, and investing in automation to drive margins and growth in a more digital-first retail environment. Kohl’s, in particular, appears to be prioritizing core, productive locations and a leaner logistics footprint designed to improve throughput, reduce operating costs, and sustain a competitive, customer-centric model across its omnichannel ecosystem.
Conclusion
Kohl’s decision to close 27 underperforming stores and shutter the San Bernardino e-commerce fulfillment center illustrates a deliberate, strategy-driven approach to real estate optimization and supply chain efficiency. The company is balancing store rationalization with technology-enabled fulfillment, aiming to preserve service quality while strengthening profitability and cash flow. Leadership transition, including the planned shift to Ashley Buchanan as CEO, accompanies a broader strategic repositioning that emphasizes disciplined cost management, a leaner asset base, and continued investment in omnichannel capabilities.
The closures sit within a broader industry context where peers such as Nordstrom and Macy’s are pursuing parallel paths of distribution consolidation and network optimization. The WARN-driven layoffs and geographic distribution of store closures highlight the human and regional dimensions of these strategic shifts. As Kohl’s navigates these changes, the company remains focused on delivering a resilient customer experience, maintaining a productive store portfolio, and advancing a logistics framework designed to support growth and competitive advantage in a rapidly evolving retail landscape. The outcome will hinge on how well Kohl’s can translate these structural changes into stronger margins, steadier cash flow, and sustained, positive customer engagement across its omnichannel platform.
