QUOTE AND NEWS
Financial Times  9 hrs ago  Comment 
Choice of Strasbourg for European state ceremony seen as snub to German politicians
The Economic Times  Jun 19  Comment 
In the Nifty pack, 30 stocks were trading in green, while 21 stocks were in red.
The Hindu Business Line  Jun 17  Comment 
Germany’s longest serving post-war leader Helmut Kohl, the father of national reunification and an architect of European integration, died today at the age of 87. Kohl helped a Germany that was spl...
Japan Today  Jun 16  Comment 
Germany's longest serving post-war leader, Helmut Kohl, the father of German reunification and an architect of European integration, died Friday at the age of 87. Kohl, a passionate…
Benzinga  Jun 16  Comment 
(Author Mark Fritz was East Berlin correspondent for the Associated Press from 1990–1993; as an editor on the Foreign Desk, he filed the bulletin on the fall of the Berlin Wall.) History handed West German Chancellor Helmut Kohl an epic...
Motley Fool  Jun 12  Comment 
Kohl's stock has fallen by more than a third since December, even though the company is producing record amounts of free cash flow.
Motley Fool  Jun 7  Comment 
Retail might be in a tough spot, but one of these two at least has a fighting chance.
Motley Fool  Jun 6  Comment 
The retailer's shares fell after a warning from rival Macy's.
Clusterstock  Jun 6  Comment 
Macy's warned on Tuesday that its profit margins are shrinking, sending the company's shares down by as much as 7%. Karen Hoguet, the department-store chain's chief financial officer, said at the annual investor day that second-quarter gross...




 

Kohl’s (NYSE: KSS) is a U.S. department store chain that sells a mix of items including men's and women's apparel, home decor, and accessories. The department store appeals to middle-class consumers by selling discounted branded and private label clothing and home goods. Kohl's is in the same category of national department store competitors such as J.C. Penney (JCP) and Macy's Inc. (M).

Kohl's is vulnerable to a weak U.S. economy and declining consumer spending because the company has no stores outside of the US and does not have an international presence to serve as a buffer to fluctuations in the US economy. However, Kohl's discounted pricing allows it to ride out tough economic times better than its competitors.

Company Overview

Business Financials

Kohl’s operates specialty department stores and an e-commerce site in the United States that sell moderately-priced branded and private label merchandise.

Business Segments

Kohl's reports its sales in six different business segments:

  • Women's (32% o
  • Home (18% of net sales)
  • Children's (13% of net sales)
  • Accessories (10% of net sales)
  • Footwear (8% of net sales)

Kohl's stores and e-commerce site carries a variety of clothing, accessories and home goods. The company's merchandise offerings include products from branded manufacturers, such as Nike, in addition to exclusive and [[private labr Vera Wang and the Chaps brand that Kohl's offers exclusively from Polo Ralph Lauren (RL).

Business Growth

FY2010 (ended January 30, 2011)[1]

  • Net sales increased 7.1% to $18.4 billion.
  • Net income increased 12.4% to $1.1 billion.

Trends and Forces

Growing Kohl's Exclusive and Private Brands

Exclusive and private label merchandise account for almost half of Kohl's sales, a figure Kohl's has worked to increase by adding new exclusive brands like Helix, Mudd, Dana Buchman, and Hang Ten.

Department stores are increasingly seeking to distinguish themselves and earn higher profit margins by offering exclusive brands and private label brands. Exclusive brands are brands marketed under the wholesaler's name that are sold only in a particular chain; one exclusive brand at Kohl's is the Chaps line by Polo Ralph Lauren (RL). Private label brands are produced by wholesalers, but sold under the brand name of the retailer. Exclusive brands such as Simply Vera by fashion designer Vera Wang, can help draw customers into Kohl's stores, as the products can only be found at Kohl's. Kohl's own private label products are typically priced lower than branded merchandise, but have a higher profit margin for Kohl's as the retailer is able to receive the good at a lower cost by avoiding branded manufacturers.

Higher Raw Materials Costs May Force An Increase In Clothing Prices

In a recovering economy, the last thing that consumers want is higher prices, especially on necessities like clothing. Many in the fashion industry are expecting price increases of as much as $2 for a t-shirt. As consumers ease back into discretionary spending, higher clothing prices delay the recovery as they discourage spending. Companies like Kohl's rely on consumers spending money on clothes, and if higher prices discourage consumer spending, the company's bottom line will suffer due to these significant factors. blab

Competition

Kohl’s is one of the smallest national department store retailers. It competes primarily against other department stores, but also is facing increasing competition from discounters and mass merchandisers like Target (TGT) and Wal-Mart (WMT) as these companies grow their clothing and home goods categories.

Kohl's primary competitors are moderate-priced department stores, J.C. Penney (JCP), Macy's Inc. (M) and Sears Holdings (SHLD). Kohl's main points of differentiation from these other companies is Kohl's usage of the off-mall store model and low prices. These factors have played key roles in Kohl's ability to cope with recessionary environment while its competitors have lost more sales than Kohl's as shoppers trade down and visit malls less frequently.

References

  1. KSS 2010 10-K pg. 13
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