Kohl's CorporationKSS

Morningstar Rating

Stock Research and Analysis

by Kimberly Picciola

Kohl's has had great success with its conveniently located stores that cater to consumers in search of brand-name goods at value prices. Although the discretionary retailer has not been immune to the slowdown in consumer spending, we think its strong Read more

Bulls Say

Kohl's has room to expand into new and existing markets.

A greater percentage of sales is coming from higher-margin private-label and exclusive-branded goods, which has helped margins.

Its off-the-mall format distinguishes Kohl's from the rest of the department store industry, which is dominated by mall-based stores that consumers have found less convenient in recent years.

Kohl's has demonstrated it can recover from missteps. Margins and inventory levels have improved since the company's merchandising mishaps in 2003.

Kohl's has elevated its merchandise offering with brands such as Simply Vera by Vera Wang and Food Network. Read more

Bears Say

Kohl's has expanded at an aggressive pace. New stores may cannibalize existing stores, pressuring same-store sales.

Some traditional department store chains have copied elements of the firm's strategy in an effort to regain lost market share, most notably J.C. Penney, which is opening new stores in off-the-mall locations. The increased competition could pressure Kohl's revenue growth.

Discounters like Wal-Mart and Target are investing in their apparel businesses.

Kohl's sells mostly discretionary items. With its moderate-income consumer pinched in this difficult economic environment, sales and profit growth could be stunted for an extended period of time.

Kohl's Simply Vera line sells at prices that are considerably higher than most goods in its stores, which may scare away its more moderate consumer. Read more

Strategy

With its innovative off-the-mall store format and value-priced branded merchandise, Kohl's straddles the line between discounter and department store and continues to capture share from department store Read more

Management

In August 2008, Kevin Mansell was named CEO replacing R. Lawrence Montgomery who had served in that role since 1999. We think this was part of a natural succession plan given that Mansell, who formerly served as president of the company, started working Read more

Profile

Kohl's operates more than 1,000 specialty department stores across the United States. Targeting middle-income customers, the stores feature moderately priced, nationally Read more

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