Tags: Kohls | Tough | Retail | Angle

Kohl's Works a Tough Retail Angle

Monday, 02 May 2011 03:31 PM

Retailers these days must fight for their place on what MBAs call the “production-possibility frontier curve.”

On one end you've got those companies that make just a few widgets but they make them well and charge more for them, slapping on some services as well.

On the other end of the curve, you'll find companies that make a ton of widgets and do so cheaply, selling many more of them but at a lower price.

You get the picture: Neiman Marcus on one end, Target and Wal-Mart on the other.

So what about everybody else? How can they find their spot along the curve without being stuck in the middle (i.e., a me-too product)?

That's where those MBAs pay off, as managers find ways to differentiate themselves from the crowds by offering the right blend of products at the right prices in the right locations.

Kohl's (KSS), it seems, is doing just that.

In late January, the company reported that net income for the fourth quarter of 2010 increased 14 percent from a year earlier to $493 million. Net sales hit $6 billion, an increase of 6.3 percent for the quarter. Comparable store sales for the quarter increased 4.3 percent.

For all of 2010, net income came to $1.1 billion, a 12 percent gain from $991 million for fiscal 2009. Net sales rose 7.1 percent to $18.4 billion.

Comparable store sales increased 4.4 percent over the prior year.

Kohl's recently marked the opening of nine new stores across seven states. "We are pleased to be in a position to create more than 1,200 jobs, as Kohl's continues to grow and build market share in a challenging economy," Kevin Mansell, Kohl's chairman, president and chief executive officer, says in a statement.

"We continue to bring customers new stores where they can enjoy quality national and exclusive brands at exceptional values. Additionally, we are investing in our existing store base, to keep the customer experience fresh and exciting, by remodeling 100 stores this year alone."

To back up this optimism, Kohl's board declared a quarterly dividend of $0.25 per common share, the first cash dividend paid to common shareholders in company history.

Analysts tracked by Thompson/First Call have a mean target price on the stock at 62.72, implying a nearly 18 percent upside from recent prices.

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Retailers these days must fight for their place on what MBAs call the production-possibility frontier curve. On one end you've got those companies that make just a few widgets but they make them well and charge more for them, slapping on some services as well. On the...
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2011-31-02
Monday, 02 May 2011 03:31 PM
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