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Kohl's Inviting Shoppers to 'Explore'

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, in-store changes, and continuing exclusive brand programs. During its recent 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. Comps 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. "

Mansell explained aspects of the Explore the Store strategy: "We feel we have the merchandise content moving in the right direction, the store experience moving in the right direction, and our marketing focused on those 'Only at Kohl's' brands." He said 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 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 the third-quarter introduction of soft home elements of the store-wide Vera Wang program.

Mansell also noted the recent promotion of Rick Seeger to executive vp, gmm for home and footwear. He took the post upon the January departure of former evp, gmm Chris Capuano. Seeger 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.

Kohl's is on schedule to open its New York design office this spring, with about half of the team already appointed.

On a related store-improvement front, Tom Kingsbury, senior evp, elaborated on the progress of the "innovation stores" prototype. "Clearly, customers are noticing the differences, and it is showing up in the top line," he 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 added.

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