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Kohl's Looks Poised on Solid Online Sales & Partnerships

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Kohl's Corporation (KSS - Free Report) is in solid shape, courtesy of strong e-commerce business. Also, the company’s lucrative partnerships are yielding. Let’s take a closer look at the factors working in favor of this department store retailer.

Digital Business: A Key Driver

Kohl’s is benefiting from its growing e-commerce business for a while. Markedly, digital sales witnessed a 58% jump during second-quarter fiscal 2020, led by customers’ increased shift to online shopping amid the coronavirus outbreak. Given the need of the hour, management ramped up its digital marketing and enhanced its website to cater to customers’ needs. Certainly, the company’s investments toward boosting online capabilities and improving consumer engagement are yielding. Management expects to leverage its strong online presence during the upcoming holiday season.

Moreover, 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, Kohl’s has been expanding its e-commerce fulfillment centers and strengthening in-store pickups. In fact, the company has been witnessing increased adoption of Buy-Online-Ship-to-Store (BOSS) and/or BOPIS.

 

Partnerships Boosting Performance

Kohl’s has been strengthening its ties with retail giant Amazon (AMZN - Free Report) to drive traffic. Incidentally, the company is benefiting from the rollout of its Amazon returns program nationwide. According to this program, Kohl’s stores accept free, unpackaged and easy returns for customers of Amazon. The company is witnessing improved store traffic from the Amazon returns program since its stores reopened following COVID-19 closures. One of the prime objectives of this program is to convert more customers as loyal Kohl’s shoppers.

In an earlier development, Kohl’s decided to sell Amazon devices, accessories and smart home devices in selected stores in Los Angeles and Chicago. Kohl’s believes that this store-within-store concept will boost traffic, thanks to the availability of Amazon’s varied electronics options. In the long run, the company is expected to receive significant boost to its business through this partnership. Further Kohl’s partnership with Fanatics, Property Brothers and Home Decor is expected to strengthen performance.

Is All Rosy For Kohl’s?

The coronavirus outbreak, which led to the closure of stores, impacted Kohl's fiscal second-quarter performance. Notably, net sales declined 22.9% year over year due to nearly 25% less operating days compared with the prior-year quarter’s figure and reduced working hours amid the pandemic. Also, escalated costs and reduced margin are concerns.

Nevertheless, management reopened all its stores, following the relaxation of the coronavirus outbreak-induced lockdown restrictions. Moreover, Kohl’s store drive-ups as well as customer pick up plans amid the pandemic are yielding. These along with the aforementioned upsides are likely to help this Zacks Rank #3 (Hold) companyremain in investors’ good books. Notably, Kohl’s shares have gained 10.4% in the past three months compared with the industry’s growth of 3.8%.

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