As it works to set a growth path while dealing with activist investors, Kohl’s Corp. plans to open 100 new stores, many in smaller markets and using a smaller footprint operation.
Jill Timm, the company’s CFO, speaking at the Kohl’s Investor’s Day conference, said it has successfully tested a smaller 35,000-square-foot store concept and intends to open 100 or more of those formats over the next four years. Company expansion plans include new, smaller markets across the United States.
“We expect over $500 million in sales from this opportunity,” she said, “and we’re targeting a 15%-plus return on investment.”
Timm said 99% of stores are four-wall profitable and 95% are generating more than a million in cash flow. Kohl’s is fulfilling 40% of web-initiated sales through its physical locations, she added.
Kohl’s intends to expand Sephora to a $2 billion business by 2025 with 850 in-store operations and 400 openings this year to keep the retailer on track to its goal. Timm said 25% of Sephora customers are new to Kohl’s, which is getting a mid-single-digit sales lift from stores adding a Sephora operation, coming from higher traffic and ticket. She added 50% of Sephora baskets include products from other parts of the store.
Kohl’s is working towards the ability to accept Sephora gift cards and allowing Sephora customers to pick up their digital purchases at its stores, Doug Howe, Kohl’s chief marketing officer, said. The company also is offering Sephora incentives at Amazon product return points in its stores.
Kohl’s plans, according to the company, also include:
- Evolving to a focused active and casual lifestyle concept
- Enhancing omnichannel operations
- Leveraging its strong off-mall footprint
- Acquiring millions of new customers with Amazon returns traffic flow
- Becoming a leading destination for iconic national brands
- Injecting discovery and introducing new initiatives to broaden Kohl’s customer reach
- Increasing everyday value through its rewards program
- Using data science to accelerate personalization and localization
- Driving low single-digit sales growth
- Growing earnings per share at mid to high single-digit rates
- Returning significant capital to shareholders
