Kohl's (KSS) Focuses on Store Enhancement: Things Worth Noting

Kohl's Corporation KSS has been committed to its store growth strategy and efforts to resonate with the changing needs of customers. The company plans to increase its investment in store strategies in the next three years, which is likely to enhance the experience for store workers and customers. Management also stated that over the next four years, nearly 100 new, smaller stores are to open in regions earlier untapped by the company.

The company has been in the process of modernizing its stores through features and services like In Store Pick Up, Drive-Up, Self-Pick Up and Amazon Returns, thereby increasing convenience for customers. Apart from this, the partnership with Sephora has been working well for KSS. The company expects Sephora at Kohl’s to hit 850 locations by 2023. This will include Sephora’s prominent position at the store front, with expanded categories in surrounding areas. The initial small-store formats mentioned above will be the first to test Sephora at Kohl’s in a smaller space.

Moving on, Kohl’s stated that it is introducing dedicated zones in its stores for discovery, which will enable the curation of cross-category products and brands, such as diverse-and female-owned companies. The company has also been focused on offering an integrated store and digital experience for which it has been making several technological investments. Kohl’s is rolling out self-serve buy online, pick up in store, which will be available across all stores by the end of the year. Further, the company continues to test self-serve returns, presently available in more than 100 stores, with growth plans over the next 18 months.

Stores play a key role in Kohl’s omnichannel operations as about 40% of the company’s digital orders are presently being fulfilled by stores.

Wrapping Up

Kohl’s has been grappling with high SG&A costs and freight and product cost inflation. These downsides weighed on the company’s first-quarter fiscal 2022 results, which prompted management to lower its guidance for the fiscal. Shares of this Zacks Rank #5 (Strong Sell) company have slumped 26.5% in the past three months compared with the industry’s decline of 18.2%.

However, we believe that the abovementioned focus on the store growth strategy and omnichannel strength is likely to work well for Kohl’s amid the evolving retail landscape.

3 Retail Stocks to Bet on

Here are three better-ranked stocks – Dillard's, Inc. DDS, The Kroger Co. KR and Abercrombie & Fitch Co. ANF.

Dillard's, which operates retail department stores, sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 224.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Dillard's current financial-year sales suggests growth of 6.1% from the year-ago period. DDS has an expected earnings per share (EPS) growth rate of 14.6% for three to five years.

Kroger, a renowned supermarket company, carries a Zacks Rank #2 (Buy). The company has an expected EPS growth rate of 9.9% for three to five years.

The Zacks Consensus Estimate for Kroger’s current financial-year sales suggests growth of 3.2% from the year-ago period. KR has a trailing four-quarter earnings surprise of 22.1%, on average.

Abercrombie & Fitch, a specialty retailer, holds a Zacks Rank #2. Abercrombie & Fitch has a trailing four-quarter earnings surprise of 103.5%, on average.

The Zacks Consensus Estimate for ANF’s current financial-year sales suggests growth of 3.7% from the year-ago period.

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