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Branded to the core at Kohl's

Milwaukee — With 75 percent to 80 percent of its merchandise rooted in nationally known brands, Kohl's continues to search for labels that it can "explode" through home and across its other merchandise segments in the store, according to company president Kevin Mansell.

Mansell said the home category is at least as important to its overall business model as any of its apparel segments.

"We believe in the home, and our stores say that without exception," he said during an interview following the company's annual shareholders' meeting here last week.

For example, Dockers is one brand that has moved into home from apparel and has become a "spectacular" performer, he said.

The retailer will look at an expansion of Osh Kosh into home and sees potential for Axcess, the new Liz Claiborne apparel label it introduced this year. However, the strategy isn't always as successful. He cited Fubu in young men's apparel as a "a great brand, but it's not Dockers."

Fieldcrest is still in its top 20 brands, he said, and Martex is "doing very well."

Kohl's sees "well over 1,000 stores across the United States" on its horizon, said Larry Montgomery, chairman and ceo. Montgomery said he's been consistently surprised by the 485-unit retailer's growth prospects. Every time he's assessed a particular market's storing potential, it's turned out to be 20 percent to 25 percent higher, he said. "The train is just leaving the station," he quipped.

With coast-to-coast expansion no longer an issue, the retailer will focus on new and fill-in units, with 80 stores slated to open this year. In 2004, 95 to 100 new locations will open, with half of them in new markets, including San Diego and Sacramento, CA.

The overall response to its entry into California has been spectacular, said Mansell, and "90 percent of what we thought we needed to do, worked."

Kohl's is continuously on the lookout for new real estate, Montgomery said, but "if there's no dirt available" it's prepared to act opportunistically, as it did in the acquisition of about seven former Kmart locations, including one in Fresh Meadows, NY — its first in New York City.

But the company will continue its organic growth strategy — acquisitions are not part of its thinking and international expansion isn't yet on the horizon, Montgomery said.

The four smaller-format stores it opened last year — which, at about 60,000 square feet, serve communities of about 100,000 people and less — are still undergoing testing, and it will take a year to fully understand how they are working, Mansell said. No other smaller-format stores will open this year. "It's a very small piece of what's going on in this company," Montgomery added.

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