Kohl’s Corporation (NYSE:KSS) is strategically focusing on key growth areas to position itself for success in 2024. The company is particularly keen on building its home business, which is identified as a solid growth opportunity. In addition to the home category, Kohl’s is strengthening its omnichannel capabilities, aiming to enhance customer experience and accelerate digital business growth.
Home Category Growth
Kohl’s is committed to expanding its home business by forming new vendor relationships and investing in merchandising organizations. The company has introduced new products into stores, such as wall art, glassware, ceramic home decor, barware, botanicals, and lighting, among others. The home business has outperformed expectations in stores, driven by the strong initial performance across new categories. Kohl’s plans to significantly grow this category by expanding assortments.
Omnichannel Capabilities
Kohl’s is actively working on growing its store portfolio and accelerating digital business growth. The company is opening new stores to drive long-term growth and has been focusing on enhancing its digital presence. Efforts to improve the website and boost mobile traffic, along with the adoption of the Kohl app, are expected to contribute to online sales growth in the long run. Kohl’s has opened new stores, relocated existing ones, and is committed to adapting to changing consumer preferences.
Key Priorities
Kohl’s highlights several key priorities that are fueling its growth strategy:
- Improving customer experience
- Simplifying value strategies
- Disciplined inventory and expense management
- Solidifying the balance sheet
The company is focused on driving growth in various categories, including gifting, Sephora, impulse, home decor, and new stores. The partnership with Sephora to create an elevated Beauty at Kohl’s has been successful, and the company expects Sephora at Kohl’s to be worth $2 billion by 2025. Kohl’s is also growing its loyalty programs, including Kohl’s Cash, Kohl’s Rewards, and private-label credit cards.
Challenges
While Kohl’s has made progress in its strategic priorities, it faces challenges such as higher selling, general, and administrative (SG&A) expenses. In the third quarter of fiscal 2023, SG&A expenses increased due to continued investments in Sephora shop openings, wages, and other store-related expenses. Product cost inflation has also impacted the gross margin.
Outlook
Despite challenges, Kohl’s aims to stay well-positioned for growth in 2024 by focusing on its strategic initiatives. The company’s stock has shown positive momentum, gaining 45.4% in the past three months, outperforming the industry’s growth of 43.9%.
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