KSS » Topics » Strategic Initiatives

This excerpt taken from the KSS 10-K filed Mar 20, 2009.

Strategic Initiatives

Management believes that its four strategic initiatives are keys to achieving future success. These initiatives focus on merchandise content, marketing, inventory management and the in-store shopping experience.

Our merchandise content initiatives are focused on increasing market share by expanding Kohl’s appeal to a broader range of customers. New brand launches in 2008 included:

 

   

Jumping Beans – our classic opening price point brand in the children’s category

 

   

Bobby Flay – an expansion of the Food Network brand with celebrity talent, featuring Mediterranean influences, bold colors and rich textures

 

   

FILA Sport – performance and leisure apparel, footwear and accessories for women, men and children

 

   

ELLE – expansion of this exclusive brand of Women’s apparel to all stores

 

   

Abbey Dawn – a new juniors’ lifestyle brand by award-winning singer/songwriter Avril Lavigne

 

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Gold Toe – a national hosiery brand

In 2009, Kohl’s is expected to become the exclusive U.S. retailer for the following brands:

 

   

Dana Buchman – a classic lifestyle brand, which spans several categories, including women’s apparel, intimate apparel, accessories, and footwear, launched in February 2009. Ultimately, the brand may extend into home, beauty and fragrance categories.

 

   

Hang Ten – a California lifestyle collection for young shoppers is expected to be available in April 2009

 

   

Mudd – expansion of Kohl’s current Mudd merchandise assortment in apparel, accessories, jewelry and domestics is expected to be available beginning in July 2009.

Our marketing initiatives are designed to differentiate Kohl’s in the marketplace while maximizing the return on our marketing investment. Our 2008 marketing efforts, especially during the holiday season, were designed to showcase Kohl’s as THE one-stop destination for shoppers looking to get the most for their money during a challenging economic environment. We continued to target our most loyal customer – the Kohl’s charge card customer. We also emphasized our flexible return policy.

Our inventory management initiatives are designed to ensure that we have the right inventory, in the right stores, at the right time. Size optimization is focused on ensuring that each of our individual stores has inventory in the correct style, color and size. Markdown optimization is focused on pricing clearance items at the appropriate price for each location’s inventory and sales history. Another important inventory management initiative is to increase our speed-to-market through our “Concept to Customer” initiative which allows us to develop and deliver product quicker, while meeting our customers’ needs and remaining trend right. Since launching our cycle time reduction initiative, we have achieved a 10-15 week reduction in cycle time, with the majority of our products designed and delivered to our stores within 32 weeks. Brands requiring “fast-fashion”, such as ELLE, are developed in as little as 12-16 weeks. During 2008, we aggressively managed our inventory levels by reducing seasonal inventory levels, while maintaining levels in basic areas such as hosiery and underwear. As a result of strong inventory management and cycle time reductions, clearance inventory levels were also down significantly compared to 2007.

The objective of our in-store shopping experience initiatives is to satisfy the changing needs and expectations of our customers. Practical, easy shopping is about convenience. At Kohl’s, convenience begins even before the customer enters the store, with a neighborhood location close to home. Other aspects of convenience include convenient parking, easily accessible entry, knowledgeable and friendly associates, wide aisles, a functional store layout, shopping carts/strollers and fast, centralized checkouts. Our new point-of-sale (“POS”) system was installed in all stores in 2007. The face-to-face customer interaction, touch screens, signature capture, customer display and other features of the new POS system are improving time-in-line resulting in a modern, efficient and improved customer experience. The physical layout of the store and our focus on strong in-stock position in style, color and size is aimed at providing a convenient shopping experience for an increasingly time-starved customer.

In 2006, we introduced a new “innovation” store design to make our stores more visually exciting and easier to shop. Enhancements included new and updated exteriors; improved fitting rooms, lounges, restrooms and customer service areas; and specialty fixturing including new residential-styled home hutches. We have also updated the junior’s area with trendy concrete flooring, a fun lounge area, full wardrobe strikepoints and additional cross-shopping opportunities; redesigned our center core to improve sightlines throughout the store; and introduced upgraded fixturing and wayfinding signage. In 2008, our in-store shopping experience efforts were focused on improving customer service scores.

For discussion of our financial results, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

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This excerpt taken from the KSS 10-K filed Mar 21, 2008.

Strategic Initiatives

Management believes that its four strategic initiatives are keys to achieving future success. These initiatives focus on merchandise content, marketing, inventory management and the in-store shopping experience.

Our merchandise content initiatives are focused on increasing market share by expanding Kohl’s appeal to a broader range of customers. In 2007, we launched the highly-anticipated Simply Vera Vera Wang brand across multiple departments in our stores, including women’s, jewelry, accessories, intimate apparel and soft home. We also launched the Food Network branded line of home goods in Kohl’s stores nationwide in 2007. This collection includes cookware, dinnerware, kitchen gadgets, cutlery, food storage, pantry ware, kitchen electrics and home textiles. New brand launches in 2008 are expected to include:

 

   

Jumping Beans, our classic opening price point brand in the children’s category

 

   

Bobby Flay, an expansion of the Food Network brand with celebrity talent, featuring Mediterranean influences, bold colors and rich textures

 

   

FILA Sport, performance and leisure apparel, footwear and accessories for women, men and children

 

   

Expansion of ELLE to all stores in the Spring

 

   

Abbey Dawn, a new juniors’ lifestyle brand by award-winning singer/songwriter Avril Lavigne

In January 2008, we announced a licensing agreement with Liz Claiborne naming Kohl’s as the exclusive U.S. retailer for the Dana Buchman brand on a wide variety of merchandise. This classic lifestyle brand will span several categories, including women’s apparel, intimate apparel, accessories, and footwear and is expected to be available in Spring 2009. Ultimately, the brand may extend into home, beauty and fragrance categories.

 

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Our marketing initiatives are designed to differentiate Kohl’s in the marketplace while maximizing the return on our marketing investment. We focused our 2007 efforts on encouraging our customer to explore the store to increase the number of areas of our store that she shops for her family and herself. We also continued the “Only at Kohls” theme in 2007, not only focusing on private brands but also nationally recognized brands found only at Kohl’s.

Our inventory management initiatives are designed to ensure that we have the right inventory, in the right stores, at the right time. Size optimization is focused on ensuring that each of our individual stores has inventory in the correct style, color and size. In 2007, we completely redesigned our clearance process when we implemented our markdown optimization program. Markdown optimization is focused on pricing clearance items at the appropriate price for each location’s inventory and sales history.

Another important inventory management initiative is to increase our speed-to-market through our concept-to-customer strategy. Our goal is to reduce our average product cycle time from 40 weeks to 25 weeks during 2009 for most products. Brands requiring “fast-fashion” such as ELLE will be developed in as little as 12-16 weeks.

The objective of our in-store shopping experience initiatives is to satisfy the changing needs and expectations of our customers. Practical, easy shopping is about convenience. At Kohl’s, convenience begins before the customer enters the store, with a neighborhood location close to home. Other aspects of convenience include convenient parking, easily accessible entry, knowledgeable and friendly associates, wide aisles, a functional store layout, shopping carts/strollers and fast, centralized checkouts. Our new point-of-sale (“POS”) system was installed in all stores in 2007. The face-to-face customer interaction, touch screens, signature capture, customer display and other features of the new POS system are improving time-in-line resulting in a modern, efficient and improved customer experience. Though our stores have fewer departments than traditional, full-line department stores, the physical layout of the store and our focus on strong in-stock position in color and size is aimed at providing a convenient shopping experience for an increasingly time-starved customer.

In 2006, we introduced a new “innovation” store design to make our stores more visually exciting and easier to shop. Enhancements included new and updated exteriors; improved fitting rooms, lounges, restrooms and customer service areas; and specialty fixturing including new residential-styled home hutches. In 2007, we updated the junior’s area with trendy concrete flooring, a fun lounge area, full wardrobe strikepoints and additional cross-shopping opportunities; redesigned our center core to improve sightlines throughout the store; and introduced upgraded fixturing in handbags, fashion accessories and intimate apparel. Visual enhancements in 2007 included the Simply Vera Vera Wang, Chaps Home and Food Network launches, strikepoints in men’s, junior’s and bedding, upgraded fixturing, and wayfinding and directional signage.

For discussion of our financial results, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

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EXCERPTS ON THIS PAGE:

10-K
Mar 20, 2009
10-K
Mar 21, 2008

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