Kohl's home adds private brand

Retailer hopes apartment 9 will add a contemporary touch

Carole Sloan, May 3, 2004

Milwaukee — Kohl's is adding a new private brand — apartment 9 — to its mix of national and private brands in home.

Noting that, "There has been a gap and void in contemporary design," Kevin Mansell, president, said the new brand — which embraces soft home as well as women's and men's sportswear and accessories — will launch in the third quarter.

It will cover a "modern sophistication," Larry Montgomery, chairman and CEO, said at the firm's annual shareholders meeting here last week. Apartment 9 will be sourced in a combination of direct sourcing as well as working with suppliers, Mansell added. The brand joins Gloria Vanderbilt, Villager, Laura Ashley, Martex, and Sonoma in the Kohl's mix.

Gloria Vanderbilt was expanded from apparel to home "and in the 30 days it's been in the stores, it's doing great," Mansell said. "It's a more limited assortment than it could be," he added, intimating an expansion beyond the bedding and towel categories. "The new Laura Ashley program in home probably will be expanding into more home categories as well," Montgomery related.

Sonoma, another of the company's private brands in apparel and home is being positioned as "a casual, more basic, comfortable lifestyle" Mansell explained.

As for future brand acquisitions, Mansell said, "We definitely are very active on all brand initiatives." And while not answering directly about the company's interests in Royal Velvet, he said, "Li & Fung is our single biggest trading partner."

In the press meeting after the shareholders meeting, Daisy Fuentes, whose signature apparel launched this spring in 180 stores, commented, "Home is clearly on my agenda," but gave no specifics.

During the meeting, Montgomery discussed the challenges from its disappointing performance in 2003. "Our focus is on increasing comps, raising revenue margins to 34 percent, and increasing earnings 25 to 30 percent."

Mansell reported, "We have an opportunity to improve. Our stores were overstocked and became difficult to shop. The assortments were not what customers were looking for, and our marketing was not unique."

Through focus groups, customer surveys, and talking with store associates, the company is reducing quantities of merchandise and number of styles, and changing the timing of product introductions, "So there is less in the beginning of the season and more frequently arriving new merchandise over the season."

In addition, "We've reduced the merchandise in the aisles and allowed more space between fixtures, as well as putting less merchandise on the fixtures." The company will emphasize "being the headquarters for wardrobe fundamentals."

Private brands represent 20 to 25 percent of the business, while 50 brands do more than half the company's business, Mansell said. Apparel is 70 percent of the sales, home 30 percent.

For 2004, capital expenditures will be about $1 billion, compared with $500 million in 2003, said Montgomery. Twenty stores will be opened in Sacramento, San Diego, Fresno and Bakersfield, as well as Minneapolis and Memphis.

Discussing home textiles after the meeting, Jack Moore, executive vice president, home and footwear, described the company's towel business as beginning with the "Big One" at $3.99; moving up to the "Great One" at $4.99; Great Luxor from Martex, Villager and Gloria Vanderbilt at $7.99; Martex Pima at $9.99; and topping out at $11.99 with a zero-twist microfiber cotton Laura Ashley.

"We look at towels from the technical perspective —weight size, construction quality; as well as aesthetics in color palette and hand, and branding where we are sensitive to position lifestyles comparable to bedding, like Laura Ashley and Gloria Vanderbilt," Moore said.

In sheets, Moore remarked, "We don't spend a lot of time analyzing everyone's thread counts. We look at the quality of the sheet program in relation to the top-of-bed program."

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