T.J. Maxx, Ross Stores, and Burlington Could Have a Happy New Year

Kohl’s Planning to Get “Active” While Investors Push for Sale

Activists Investors Make Push

Kohl’s (KSS) executives kicked off the week by holding an investor-day event and sharing the company’s long-term plans. The meeting came amid ongoing pressure from activist investors, who want the retailer to consider selling itself.

Engine Capital and Macellum Advisors have criticized how Kohl’s performed during the pandemic, saying it lagged behind off-mall competitors such as TJ Maxx (TJX) and Target (TGT). The group argues department-store chain Macy’s (M) had also been more successful in that time. They want Kohl’s to sell and lease back some of its real estate holdings in order to free up cash.

Putting On Its Face

A key part of the Kohl’s playbook involves the makeup brand Sephora (LVMUY) and the company’s plans to grow related sales to $2 billion annually. Within its brick-and-mortar stores, Kohl’s has opened around 200 Sephora shop-in-shops, and the goal is to have 850 in place by 2023.

Kohl’s is also trimming things down to try and reach more customers. This includes plans to open around 100 smaller-format stores over the next four years — the first going up in the Seattle area. Executives say while Kohl’s locations are normally around 80,000 square feet, these stores are closer to 35,000 square feet.

Kohl’s Going Active

Executives say Kohl’s is working to become an activewear destination, rather than be chiefly associated with home goods and women’s clothing. So-called active merchandise made up 24% of Kohl’s revenue in 2021, up from 14% in 2016. This includes things like leggings, hoodies, seakers, and other types of athletic apparel.

Still, Kohl’s notes it’s not looking to get out of traditional clothing all together, with plans to stock more women’s dress sizes while also expanding offerings in swimwear and outdoor clothing. The company also says its “buy online, pick up in-store” option is coming to all locations this year. In the face of pressure from activist investors, Kohl’s is laying out its fitness plan.

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ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

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