Stocks

Target and Kohl’s Are Both Looking Like Retail Royalty

Three months ago I wrote a post about Target and Kohl’s pursuing different strategies to compete against the Competition, Amazon.

Target’s Omnichannel Push

The “Amazon Effect” has forced all retailers to step up their “omnichannel” game or face extinction. The ominichannel phenomenon is the ability to compete through brick and mortar and online by redesigning distribution networks and streamline supply chain operations to best serve customers on and offline. Some retailers, such as Target are already ahead of the curve as they continue to merge the digital and physical space into one seamless customer experience.

For the quarter, Target reported $23 billion in revenue, beating the $22.92 billion forecast and earned $1.52 per share vs. expectations of $1.53 per share.  But the highlights of the quarter were online sales increased 31% and in-store traffic increased 4.5%. Also, curbside pickup is now available at nearly 1,000 stores and same-day delivery service is available in more than 200 Target stores.

If You Can’t Beat Amazon, Partner With Amazon

So Kohl’s decided to pursue another strategy, much different than Target, they partnered with Amazon.

Last year, in 10 stores in the Chicago and Los Angeles metro areas, it opened Amazon smart-home boutiques. During that same time, 82 Kohl’s stores in the same area began accepting returns for Amazon. Kohl’s now accepts Amazon returns at 100 stores and has Amazon shops in 30 stores where they sell Amazon products such as the Echo smart speakers over the holiday season.

Yesterday both companies reported their earnings.

Kohl’s not only reported better-than-expected fourth-quarter results, but the offered EPS guidance for the year of $5.80 to $6.15, which is ahead of estimates of $5.75.   The company announced new partnerships during the earnings announcement.  The company has teamed up with Weight Watchers, for an in-store studio and Healthy Kitchen products at some locations.  In addition, in an effort to drive more foot traffic to its stores, Kohl’s is partnering with Planet Fitness. Kohl’s is in the process of shrinking the size of 10 of its stores and leasing space to Planet Fitness, as part of its “rightsizing” strategy.

NOTE: Kohl’s has a similar partnership in place with Aldi, which also leases space in 10 of its stores.

Based on positive forward guidance both Target and Kohl’s has a chance of moving higher.

Target

Kohl’s

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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