QUOTE AND NEWS
Benzinga  4 hrs ago  Comment 
Kohl's Corp. (NYSE: KSS) reported upbeat earnings for the fiscal fourth quarter on Thursday. The Menomonee Falls, Wisconsin-based company posted a quarterly profit of $369 million, or $1.83 per share, versus a year-ago profit of $334 million, or...
Wall Street Journal  4 hrs ago  Comment 
Kohl’s Corp. said results in its holiday quarter topped expectations on broad-based sales strength, while the retailer gave an in-line outlook for its newly-started fiscal year.
MarketWatch  12 hrs ago  Comment 
Salesforce.com, Barnes & Noble, Newfield Exploration, and Noble Energy are among notable movers in Thursday’s session.
TheStreet.com  Feb 25  Comment 
NEW YORK (TheStreet) -- Kohl's Corp is scheduled to release its 2014 fourth quarter earnings results before the market open on Thursday morning. Analysts are expecting the family-oriented department store, which sells a range of items from...
Forbes  Feb 24  Comment 
Although Walmart's global e-commerce operations reported 22% gains in sales for fiscal year 2015, U.S. same-store sales at Walmart stores were comparatively lackluster at +0.5%. Overarching retail trends like declining store traffic, the...
Market Intelligence Center  Feb 20  Comment 
Kohl's Corp (KSS) is an excellent choice for either a diagonal spread or a covered call expiring in Apr. '15 at the $67.50 level according to MarketIntelligenceCenter.com’s patented algorithms. A covered call on Kohls for a net debit of about...
TechCrunch  Feb 5  Comment 
 A new mobile application called HeartThis wants to make shopping across multiple retailers more convenient for smartphone users. The app, which is making its official debut later today on stage at StartX’s Demo Day, puts over 330 stores in...




 

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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