QUOTE AND NEWS
Forbes  Sep 26  Comment 
Among the underlying components of the Russell 3000 index, we saw noteworthy options trading volume today in Urban Outfitters, Inc. (NASD: URBN), where a total of 11,359 contracts have traded so far, representing approximately 1.1 million...
Benzinga  Sep 23  Comment 
Kohl's Corporation (NYSE: KSS) will begin selling Under Armour Inc (NYSE: UA) products next spring. According to Jonathan Komp of Baird, the relationship between the two is expected to be a win-win and will allow Under Armour to better serve an...
Reuters  Sep 20  Comment 
Macy's Inc said it would hire about 83,000 temporary workers for the holiday quarter, the third major retailer after Kohl's and Target to keep seasonal hiring largely unchanged from last year.
Yahoo  Sep 19  Comment 
Kohl's, which has more than 1,100 stores in 49 states, said the seasonal workers would be added in its distribution and e-commerce fulfillment centers as well as in its credit operations. Kohl's said the seasonal hiring started last month, adding...
Forbes  Sep 8  Comment 
After years of being available only online, in catalogs and in its handful of 'experiential' shops, American Girl will start selling its dolls in Toys 'R' Us stores beginning in late October, as well as market a limited range of products at Kohl's...
Motley Fool  Sep 7  Comment 
Two department stores attempting very different turnarounds.
MarketWatch  Sep 7  Comment 
Kohl's will start a new e-commerce distribution center in Plainfield, Ind. and hire about 300 full-time and 600 part-time employees, the company said Wednesday. The center is expected to open in the summer of 2017 and will be one of 14...
Forbes  Aug 22  Comment 
Looking at units outstanding versus one week prior within the universe of ETFs covered at ETF Channel, the biggest outflow was seen in the First Trust Consumer Discretionary AlphaDEX Fund (FXD), where 3,800,000 units were destroyed, or a 7.1%...
SeekingAlpha  Aug 22  Comment 




 

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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