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Kohl’s inviting shoppers to ‘Explore’

Menomonee Falls,Wis.Kohl’s Corp. this year is on a mission to teach its customers to shop all of its six departments – not just their favorite one, as they have typically – through stronger marketing, new in-store initiatives, and continuing exclusive brand launches. During its fourth quarter and yearend earnings call, the 817-unit mid-level department store chain referred to this as its “Explore the Store” initiative.

Kevin Mansell, president, said, “A major marketing effort for us in 2007 and beyond is to expand the share of wallet of new and existing customers.”

Kohl’s share is already envied by many competitors; the company reported a 29.3% increase in net income to $484.6 million for the fourth quarter as sales rose 16.7% to $5.4 billion. For the year, net income rose 31.7% to $1.1 billion, as sales climbed 16.0% to $15.5 billion. Comp store sales (measured on a 52-week basis) rose 5.9%.

Larry Montgomery, Kohl’s chairman and ceo, said, “We are very pleased with the top-and bottom-line results for the quarter and the year as we delivered consistent sales performance across all regions and all lines of business. We saw continued gross margin improvements as we benefited from improved inventory flow and allocation and increased penetration from our private and exclusive brands. We achieved leverage on the expense line for the year while continuing to invest for our future growth.”

Mansell explained aspects of the growth strategy. He said that research has shown that more than 50% of Kohl’s current customer transactions contain purchases from only one of its six lines of business, mainly women’s apparel. “It only takes very small changes” in marketing and in-store presentation, he said, “to have a big impact on comp store sales.”

New merchandise content for spring and the rest of 2007 represent “the largest number, and by far the largest volume, of new and expanded offerings the company has ever launched,” Mansell said. In home, this will include Casa Cristina rolling to all stores in March, Chaps debuting in May, Food Network products rolling out in kitchen, and soft home elements of the store-wide Vera Wang program.

Mansell also noted the recent promotion of Rick Seeter to executive vp for home and footwear. He has stepped into post upon the January departure of former evp Chris Capuano. Seeter has been with Kohl’s for the past eight months, and came to the company after a “long and successful” career with May Co. , where he had “broad responsibilities at the gmm level,” Mansell said.

Tom Kingsbury, senior evp, elaborated on the “innovation stores” prototype. “Clearly, customers are noticing the differences, and it is showing up in the top line,” Kingsbury said. All of the 110 to 115 new units slated to open this year will be made in the “innovation store” prototype. “We will see an intensification of graphics to encourage customers to browse all areas of the store,” he said.

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