Can Kohl's (KSS) Strategies Sustain Comps Growth In 2018?

While many retailers are grappling with receding store sales, amid increasing preference for online shopping, Kohl’s Corporation (NYSE:KSS) has been gaining from improved store traffic since the first half of 2017. The upside is mainly driven by the company’s dedicated omnichannel efforts combined with efficient brand management. Additionally, the company is on track with innovation and inventory management efforts. Given such positive notes, let’s see how Kohl’s is placed for 2018.

Strategies Aiding Comps & E-Commerce Growth

Kohl’s comps have improved lately, driven by partnership with online giant Amazon.com (NASDAQ:AMZN) . Incidentally, the company has started accepting returns from Amazon’s customers on select products. This move followed Kohl's decision to sell Amazon devices, accessories and smart home devices across 10 of its selected stores in Los Angeles and Chicago. Kohl’s will also provide free packing and shipping services for the merchandise sent to Amazon’s fulfillment centers. Per the company, this store-within-store concept will boost traffic, thereby benefiting from Amazon’s diverse electronics options.

Growth in comps also indicates that the company’s strategic initiative — Greatness Agenda — has started yielding positive results. The initiative, which commenced in first quarter of 2014, was designed to drive transactions per store and sales.

Additionally, the company’s store sales are gaining from enhanced focus on prominent brands such as Nike (NYSE:NKE) and Addidas (OTC:ADDYY) . Kohl’s is regularly introducing new brands to keep the inventory assortment fresh and drive customer traffic to stores and website. Popular launches include Fit Bed under active and wellness business and the Jumping Beans collection featuring Disney character, amongst many others.

Further, Kohl’s has been expanding e-commerce fulfillment centers, and opened its fifth facility in August, 2017. We expect that the company’s sustained focus on technology improvements and omnichannel expansion will have significant positive impacts on online sales and boost overall performance in 2018.

Moreover, investors are impressed with Kohl’s regular endeavors to drive the top-line performance. As a result, shares of the company have gained 8.6% in the past year against the industry’s decline of 17.3%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bottom Line

We note that Kohl’s has been struggling against increased shipping expenses stemming from the growth in online business and higher reserves. Further, cautious consumer spending has been marring the company’s accessories and women’s businesses.

Nevertheless, this Zacks Rank #3 (Hold) company is expected to overcome such hurdles and witness sturdy growth in the forthcoming periods, backed by top-line boosting initiatives, especially in the omnichannel realm.

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