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Jennifer Marks

Kohl's Promotes Exclusive Brands

Exclusive brands and private brands will continue to push national brands off the shelf at Kohl's, executives said during the $16.5 billion retailer's annual shareholder meeting here last week.

In 2007, private brands such as Sonoma accounted for 28.4% of sales, up 100 basis points from 2006. Exclusive brands such as Chaps accounted for 10.8%, up 230 basis points. This year, both are expected to grow by 100 to 200 basis points, said president Kevin Mansell.

"That's all coming at the expense of national brands," chairman and ceo Larry Montgomery told reporters at a press conference following the meeting.

With 60% of its customers shopping only one department, Kohl's has been trying to promote more cross-shopping. To that end, the exclusive Simply Vera Vera Wang program has scored, Montgomery said.

"The Vera Wang [shoppers], they spent more money, they opened charge accounts, and they cross-shopped," he added.

On the branded front, the recent Jumping Bean kids line will extend into home this month. Although the Elle apparel line may eventually move into home, it will be fashion accessories and related categories where Elle will roll out first, Montgomery said.

As is the case at many retail companies, the home department is at the bottom of the heap at Kohl's in terms of performance. Montgomery said the home business has been "tough" for the last eight or nine months. He noted that the cookware-driven Food Network program is performing well, "but not enough to make up for all the sheets and comforters you have to sell."

Kohl's is No. 5 on the HTT Top 50 Retailing Giants list, with 2006 home textiles sales of $1.1 billion.

Although Kohl's has pared its 2008 store opening roster from roughly 90 stores to a plan for 70 stores, the company still plans to open its 1,000th location this fall. And Montgomery sees fresh potential for real estate deals as other players either sell off in bankruptcy or close altogether.

"We've identified over 1,400 trade areas, and a lot of that is rationalization of the retail industry," he said. "Whether it's Main Street, Caldor, Clover or Mervyn's — we have a long history of dealing with distressed real estate."

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