Can Kohl’s stock sustain its momentum?

Kohl’s (KSS) stock has risen 46.2% year-to-date. The growing clout of online retailers has adversely impacted department stores’ business. As a result, department stores such as Kohl’s have taken to expanding their digital—especially mobile—and omnichannel capabilities to retain their market share. These retailers are exercising robust inventory management and are improving their merchandise mix to attract more customers.

Kohl’s Year-to-Date Gains Stand at an Impressive 46.2%

Kohl’s (KSS) collaborated with digital women’s apparel brand PopSugar and has added footwear brands such as Circus by Sam Edelman and Timberland Pro. Kohl’s also signed an agreement with Nine West and plans to sell Nine West handbags, clothing, and shoes in its stores in mid-2019. The company also added FAO Schwarz and Lego to its toys portfolio.

Against the retail tide

Kohl’s has been bucking one major retail trend. While many retailers are shutting down stores, Kohl’s is making its stores operationally smaller by adjusting its inventory and layout. This practice is intended to augment store margin performance and enhance the customer’s shopping experience.

Kohl’s has been collaborating with other retailers to utilize its free store space to drive foot traffic. A year ago, Kohl’s and Amazon inked a deal to create ten Amazon store-in-stores at Kohl’s Chicago and Los Angeles locations. In addition to accepting Amazon returns at 86 locations, Kohl’s has expanded this pilot program to another 21 stores in Milwaukee, Wisconsin.

Kohl’s has maintained a positive outlook of its partnership with Amazon. Reportedly, Kohl’s is also seeking a grocery chain to improve the utilization of the free store space at its stores.

Kohl’s peers’ stock trends

Macy’s (M) stock is up 39.6%, and Nordstrom (JWN) stock is up 35.3% through September 17. However, JCPenney (JCP) is down 39.9% through September 17, as its sales have been declining. JCP has also slashed its comparable store sales outlook for fiscal 2018, and it expects its gross margin to be under pressure due to higher markdowns.

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