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Kohl's : company profile

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Kohl's operates family-oriented, specialty department stores selling moderately priced casual apparel, footwear, accessories and home products targeted to middle-income customers. It has established a strong following among fashion-conscious teenage and young adult women as a result of a series of astute marketing partnerships with celebrity partners including Avril Lavigne, Jennifer Lopez and Daisy Fuentes, as well as with designers such as Vera Wang and Ralph Lauren for lower-priced diffusion lines. As a result, Kohl's has expanded, in the space of just a few years, from a regional chain in the Midwest to a national force competing with traditional department stores such as JC Penney and Sears and more stylish mass-merchandisers like Target.

Advertising

Click here for Adbrands Account Assignments for Kohl's. The group declared gross marketing costs of $1.16bn for fiscal 2016.

Competitors

See Retailing Sector for other companies

Brands & Activities

Kohl's has expanded rapidly since the early 1990s, from fewer than 75 regional stores in the US Mid-West to almost 1,160 stores in 49 states by the beginning of 2019. Several of its more recently opened stores are in sites previously occupied by the defunct Mervyn's chain. So far there are no stores outside the US. Kohl's stores have fewer departments than traditional, full-line department stores but offer a wide assortment of merchandise. Apparel accounts for the majority of sales. Women's clothing accounted for 30% of sales in 2016, menswear for 20%, children's (including toys) for 13% and accessories and footwear for 18%. The remaining 19% came from home furnishings.

Central to the company’s strategy is a culture focused on maintaining a low cost structure. Critical elements of this include an open-plan store format, lean staffing levels and operating efficiencies resulting from centralized buying, advertising and distribution. Typical stores have around 88,000 sq ft of retail space, though a handful of urban outlets in New York and Chicago are as large as 125,000 sq ft.

In addition to national brands, the group has introduced a number of private label or exclusive brands under the banner of "Only at Kohl's". These now account for a little under half of combined sales. Many of these labels are aimed at a funky teenage or young adult demographic, and as a result the store has established strong links with teen-oriented rock and pop stars. The main private label brands are Croft & Barrow, Apt 9, Jumping Beans and SO, but the biggest by far is Sonoma, which covers a variety of apparel and home funrnishing brands and generates revenues in excess of $1bn annually.

There are also several important exclusive partnerships with third-party licensors. Among the best-known of these is footwear line Candie's, manufactured by Iconix but sold exclusively through Kohl's. It has also promoted celebrity endorsements from a string of female musicians, including Fergie, Hilary Duff and Britney Spears. A line of teenage lifestyle products conceived by rock singer Avril Lavigne launched in Kohl's in 2008 under the Abbey Dawn name. In 2010, the store launched a new fashion line under the joint names of singer Jennifer Lopez and her then-husband Marc Anthony. Their subsequent separation the following Spring proved problematic, prompting the launch of two separate collections instead in September 2011. Other launches include Rock & Republic streetwear, and a line of clothing co-designed by TV presenter Daisy Fuentes. The store also stocks a men and boys range under license from skateboarding superstar Tony Hawk. There are also exclusive deals with designer Vera Wang for sportswear - Simply Vera Wang - and with cable TV's Food Network for branded kitchenware.

The group initiated what has proved to be a lasting relationship with Elle magazine in 2007, with a range of branded apparel. This has since been expanded into home furnishings, and even Elle-branded jewellery and cosmetics. In 2008, Kohl's negotiated exclusive rights to the Dana Buchman apparel and accessories brand from Liz Claiborne Inc, and acquired full ownership of that brand from 2011. Aside from these private and exclusive brands, the store also claims to be the #1 retailer in the US of several third-party brands including Levi's and Dockers, Lee, Bali lingerie and Columbia sportswear. It launched a big push in summer 2017 to announce the start of a retailing partnership with Under Armour, said to be the biggest product launch in the store's history.

Although Kohl's has a lower profile than Macy's and JC Penney it has established a fiercely loyal following among its customers. It ranked as the nation's "favourite" fashion retailer for three consecutive years from 2010 to 2012 in the annual survey by researcher Market Force, and was especially popular for casual wear and children's clothing. It slipped to second place in the overall ranking in 2013 behind Nordstrom, and remained there for three years, before slipping back to joint fth in 2017. Yes2You is its incentive rewards programme, with 25m customers enrolled by the end of 2014.

In 2016, Kohl's took over from rival JC Penney to become the official sponsor for the Academy Awards. Penney's had held the sponsorship for 14 years.

Financials

Financial performance has been under pressure for several years. Topline peaked in fiscal 2012 at almost $19.3bn, mainly as a result of an extra selling week, but has remained at around the same level ever since. Revenues for fiscal 2016 (ending Jan 2017) slipped back to $18.69bn, down 3% on the year before. It was the first year since 2011 that revenues were below $19bn. Same store sales declined 2.4% in 2016, also the worst performance for several years.

Net income has also declined. It topped $1bn in 2010 and 2011, before falling back below that level in 2012. It has continued to decline since then, falling back to $556m for 2016.

Revenues for the year to Feb 2019 edged up to $20.2bn; net income was $801m.

Background

The first Kohl's store opened in Milwaukee, Wisconsin in 1962. Founder Max Kohl had already built up a successful supermarket chain in the area and this was his opportunity to diversify into other goods, positioning the new business somewhere between standard department stores and discounters. Kohl's gradually established a small regional network by the late 1970s. It was acquired by British-American Tobacco in 1978, as part of that group's comparatively short-lived move into the retail sector, and expanded its presence into the nearby states of Indiana and Illinois. BAT sold off the supermarket outlets to A&P in 1983, but added additional department store outlets.

The chain was bought out by management in 1986 and the subsequent takeover of Main Street Stores expanded its estate to almost 70 stores. The company went public in 1992 and has steadily expanded its presence ever since, achieving a national presence for the first time in 2003. It was one of the star performers within the retail sector in the late 1990s, although there were signs of a slowdown after 2003 when its move into California proved a distraction for senior management. This led to the appointment of new CEO Larry Montgomery who brought the group back on track with the introduction of a strong selection of exclusive licensed products. He stepped down in 2008 and was replaced by Kevin Mansell, previously company president.

Last full revision 5th July 2017

* Archive page for historical reference only. This profile is no longer being actively updated. See active page here *


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