Back to top

Image: Bigstock

Kohl's (KSS) Fuels Growth: Adds 400 New Sephora Locations

Read MoreHide Full Article

Kohl's Corporation (KSS - Free Report) unveiled plans to add another 400 Sephora at Kohl’s shops after seeing the success in the first 200 stores. This takes the total of Sephora at Kohl’s locations to 600, which keeps the alliance between the two companies on track to achieving their goal of 850 stores by 2023. This is likely to further enhance customers’ experiences at Kohl’s stores.

Apart from this, Sephora at Kohl’s announced plans to add six new prestige beauty brands to its wide product range this spring season. These brands, which include Murad, Clarins, Jack Black, Living Proof, Versace and Voluspa, will bolster Sephora at Kohl’s existing solid portfolio that comprises renowned brands like Rare Beauty, NARS, Charlotte Tilbury, Kiehl’s, Giorgio Armani, Olaplex, Clinique and Sephora Collection.

These efforts reflect KSS’ constant efforts to strengthen the business alongside enhancing customers’ experiences by offering them more beauty products at more locations. Kohl’s launch of Sephora on its digital platform has also been receiving a favorable customer response.

Zacks Investment Research
Image Source: Zacks Investment Research

Growth-Oriented Efforts

Kohl’s has been benefiting from its strong alliances. The company has been strengthening its ties with the retail giant, Amazon, to drive traffic. Incidentally, the company has been gaining on the rollout of its Amazon returns program nationwide. According to this program, Kohl’s stores accept free, unpackaged and easy returns for Amazon customers.

Apart from this, Kohl’s has been benefiting from its growing digital business, especially amid the pandemic-led customers’ increased shift to online shopping. The company remains focused on making investments in this business, which has seen its sales more than double since 2014. In the third quarter of fiscal 2021, digital sales were robust, increasing 6% year over year and 33% on a two-year basis. Digital sales contributed 29% to sales in the reported quarter. Given the need of the hour, management has been speeding up its digital marketing and enhancing its website to cater to customers’ needs. The company’s solid endeavors to boost mobile traffic have augmented the adoption of the Kohl app, making it a vital constituent of online sales.

To improve online offerings, KSS has been expanding its e-commerce fulfillment centers alongside strengthening in-store pickups. The company’s Buy Online, Pickup In Store, Buy Online Ship to Store, curbside pickup and Amazon Returns initiatives are noteworthy. Other efforts to bolster digital sales include Smart Cart, Your Price and personalized search.

Kohl’s is also benefiting from its strategic framework introduced in October 2020. The strategic plan focuses on four key areas, driving the top line, expanding the operating margin, implementing disciplined capital management and undertaking an agile accountable and inclusive culture. Under its top-line growth initiative, the company intends to become the most trusted retailer of choice for the active and casual lifestyle. Also, it expects to reignite growth in women’s business and build a significant size beauty business. This is likely to be aided by the alliance with Sephora. Further, Kohl’s is on track to grow its Active and Outdoor category to 30% of its business. Expanding the outdoor via prudent alliances like the recent Eddie Bauer launch and strengthening of its athleisure opportunity through the launch of FLX are impressive steps in this direction.

The abovementioned expansion of Sephora at Kohl’s and the addition of new brands are likely to help KSS to keep its growth story going. Shares of this Zacks Rank #3 (Hold) company have rallied 13.9% in the past six months compared with the industry’s rise of 20.5%.

3 Retail Stocks to Bet on

Here are three better-ranked stocks – Albertsons Companies (ACI - Free Report) , Dollar Tree (DLTR - Free Report) and Macy's, Inc. (M - Free Report) .

Albertsons Companies, a leading food and drug retailer in the United States, sports a Zacks Rank #1 (Strong Buy). The company has an expected earnings per share (EPS) growth rate of 8% for three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Albertsons Companies’ current financial-year sales suggests growth of 1.6% from the year-ago period. ACI has a trailing four-quarter earnings surprise of 31.8%, on average.

Dollar Tree, the operator of discount variety retail stores, holds a Zacks Rank #2 (Buy). Dollar Tree has a trailing four-quarter earnings surprise of 8.8%, on average. The company has an expected EPS growth rate of 12.2% for three to five years.

The Zacks Consensus Estimate for DLTR’s current financial-year sales suggests growth of 3.4% from the year-ago period.

Macy's, which is an omnichannel retail organization, carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 313.5%, on average.

The Zacks Consensus Estimate for Macy's current financial-year sales suggests growth of 39.6% from the year-ago period. M has an expected EPS growth rate of 12% for three to five years.

Published in