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Kohl's thinking less is more

Acknowledging that it over-stocked shelves and cluttered aisles with "too much merchandise" in 2003, Kohl's Department Stores plans to tidy up its units to offer customers more ease of shopping at the expense of product, the company reported during its fourth quarter and year-end conference call last week.

"It sounds pretty simple. We tried to get too much merchandise on the floor in 2003," said Larry Montgomery, chairman and CEO. "Customers said they didn't like it, we didn't like it, and we got bad results. It was one of the reasons for our results."

Montgomery explained that this year, the stores will be stocked with fewer skus on the floor and more spacing in between fixtures.

"We understand you've got to be able to get a stroller between the fixtures," he added. "You're going to see much more well-presented merchandise on the floor."

Merchandise that was well received by shoppers during this period included the store's basic goods in the apparel and home departments, as well as its early selling spring goods, which have "improved significantly," said Kevin Mansell, president.

In line with the chain's new less-is-more way of thinking, Kohl's said it will quietly continue to pursue testing of its smaller prototype, which measures 66,000 square feet versus the chain's average 88,000-square-foot unit.

The test units are located in four small U.S. cities: two in the Great Lakes region — Beaver Dam, Wis., and Gaylord, Mich.; one in the Midwest corridor — Clinton, Iowa; and one on the East Coast — Wilkesboro, N.C. Of these cities, Clinton, Iowa, has the largest population, estimated at about 30,000, and Wilkesboro, N.C., has the smallest, estimated at about 3,200, based on the 2000 U.S. Census.

"I can tell you that the four stores are doing pretty well," Montgomery said. Kohl's opened these smaller stores in 2002. With two holiday seasons having passed, Montgomery said the company will follow up with investors on their status later this year.

"We still need a little more time," he said. "We've been totally focused on our 88,000-square-foot prototype and the huge potential of that. (The 66,000-square-foot prototype) is just something that we tried. It may play in our future at some point in time."

The focus does indeed remain with the regular format. Kohl's announced it would open about 95 additional units in new and existing markets this year. During the first quarter, 47 stores will open, including three entries in California — Sacramento, San Diego and Fresno — as well as one in Memphis, Tenn.

Approximately 48 stores will open during the third quarter.

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