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Kohl’s Is Up ~41% in 2018: Can Stock Sustain Momentum?

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Aug. 15 2018, Updated 8:01 a.m. ET

Kohl’s stock performance

As of August 13, Kohl’s stock price is up 40.9% on a YTD (year-to-date) basis. Kohl’s stock has been rising as its strategic initiatives gain traction. In comparison, Macy’s (M) stock is up 59.1%, while Nordstrom (JWN) stock is up 11.8%. In contrast, JCPenney (JCP) is down 22.2% as of August 13.

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What’s driving the stock?

Its partnership with Amazon (AMZN) has been one of the biggest developments for Kohl’s in the past few months. On the first quarter conference call, CEO Michelle Gass stated that the partnership had been a “positive experience” for both Kohl’s and Amazon customers. Kohl’s set up ten Amazon store-in-stores and is accepting Amazon returns at 86 locations in Los Angeles and Chicago and ships them to Amazon for no charge. The partnership is aimed at the utilization of free store space to boost traffic at Kohl’s stores. Kohl’s is also trying to rope in grocery retailers to establish store-in-stores as it focuses on smaller-format stores.

Kohl’s has adopted a standard to small store strategy where it aims to make stores operationally smaller by adjusting both inventory and layout to enhance store margin performance and improve the customer shopping experience. For 2018, the company expects 200 store conversions.

Apart from partnerships and store optimization, Kohl’s is revamping its assortment with a focus on less weather-reliant categories such as active footwear, home, and denim. Kohl’s collaborated with digital apparel brand Popsugar to enhance its women’s wear business. Kohl’s has added many new footwear brands such as Circus by Sam Edelman and Timberland Pro. It has also added FAO Schwarz and Lego to its toy portfolio.

Kohl’s is also developing its omnichannel strategy. The company has launched its “buy online ship to store” facility. It is also building six fulfillment centers with special emphasis on the automation of operations.

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