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Introducing Kohl’s, a Mid-Tier Department Store Heavy Hitter

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An overview of Kohl’s

Kohl’s Corporation (KSS) is a prominent name in the US department store industry. Kohl’s sells private labels, exclusive and national brand apparel, footwear, accessories, beauty, and home products through its stores and website, kohls.com. As of October 31, 2015, the company has 1,166 stores in 49 states.

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Kohl’s extensive presence

The first Kohl’s department store was opened in Brookfield, Wisconsin, in 1962. From a store count of 76 stores in the Midwest at the time of its initial public offering in 1992, the company expanded into the West Coast by opening 28 stores in California in 2003.

In 2006, Kohl’s expanded into the Northwest with ten new stores in Oregon and Washington. Between 2005 and 2008, the department store chain expanded its Southeast presence by opening 43 stores in Florida. With 1,166 stores as of October 31, 2015, Kohl’s is the largest department store in terms of number of stores in the United States.

An intensely competitive environment

Through its moderately priced products, Kohl’s targets the American middle class. Kohl’s competes with department store peers Macy’s (M), Nordstrom (JWN), J. C. Penney Company (JCP), Sears Holdings Corporation (SHLD), and Dillard’s (DDS). Value-oriented off-price retailers such as TJX Companies (TJX) and Ross Stores (ROST) have also emerged as key competitors for Kohl’s.

As of December 15, the market capitalization of Kohl’s was $8.8 billion. The market caps of Kohl’s department store peers as of December 15 were as follows:

  • Macy’s—$11.3 billion
  • Nordstrom—$10 billion
  • Dillard’s—$2.5 billion
  • J. C. Penney—$2.2 billion
  • Sears—$2.2 billion

Kohl’s ETF exposure

Kohl’s is a part of several retail and consumer discretionary ETFs. It constitutes 0.3%, 1.0%, and 0.4% of the holdings of the Vanguard Consumer Discretionary ETF (VCR), the First Trust Consumer Discretionary AlphaDEX ETF (FXD), and the Consumer Discretionary Select Sector SPDR ETF (XLY), respectively. The SPDR S&P Retail ETF (XRT) has 1% exposure to Kohl’s.

In this series on Kohl’s, we’ll discuss the company’s “Greatness Agenda” strategy, its focus on national brands and women’s apparel, capex plans, inventory management, and how it compares with its peer group in terms of stock price movement and valuation.

Now let’s look at Kohl’s positioning.

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