QUOTE AND NEWS
Motley Fool  Aug 31  Comment 
There's something even more worrisome in the retailer's story.
Forbes  Aug 31  Comment 
Over this past month, several department stores checked in with their earnings. Here are some overall takeaways.
Motley Fool  Aug 28  Comment 
After a big decline in its stock price, Kohl's should be on every value investor's radar.
Forbes  Aug 24  Comment 
Kohl’s has been temporarily foiled in its attempt to enforce a draconian non-compete clause in its former chief information officer (CIO) Janet Schalk. How could the company possibly argue that technology is more important than product to a...
Market Intelligence Center  Aug 24  Comment 
The patented option-trade picking algorithms that power MarketIntelligenceCenter.com's Artificial Intelligence Center have selected a covered-call trade on Kohl's Corp (KSS) that includes 6.31% downside protection. Sell one contract of the Oct....
TheStreet.com  Aug 20  Comment 
NEW YORK (TheStreet) -- Target  has gotten its groove back in hawking cheap, chic apparel, in stark contrast to struggling department store rivals such as Macy's and Kohl's . "Apparel sales were very, very strong in the quarter," said...
Forbes  Aug 17  Comment 
J.C.Penney’s second quarter 2015 was a major improvement over the previous year. Same store sales increased 4.1%, gross margin improved 100 basis points and S.G. &A. expenses dropped $63 Million to $901 million or 31.3% of sales.  These are...
Benzinga  Aug 15  Comment 
In a report published Friday, MKM Partners analyst Patrick McKeever reviewed Koh's Corporation (NYSE: KSS)'s second-quarter results, noting that it was overall "disappointing," even though comps were positive for the third quarter in a...
MarketWatch  Aug 14  Comment 
Kohl's Corp. has been downgraded to neutral from buy at UBS due to concerns that the retailer's efforts to grow the business won't be enough for a turnaround. Kohl's posted weak sales in earnings announced Thursday. "We think KSS dropped enough...




 

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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