Kohls Corp (KSS)KSS

Kohl's Corporation (KSS) Stock Analysis

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.

Company Profile

History and Background

Kohl's Corporation (KSS) is an American department store chain founded in 1962 by Maxwell Kohl. Headquartered in Menomonee Falls, Wisconsin, Kohl's operates over 1,100 stores in 49 states. The company primarily focuses on middle-income families, offering a wide range of products, including apparel, footwear, accessories, home goods, and beauty products.

Core Business Areas

• Apparel: Clothing for men, women, and children, including national brands and private labels.
• Footwear: Shoes for men, women, and children, encompassing athletic, casual, and dress styles.
• Accessories: Handbags, jewelry, scarves, hats, and other fashion accessories.
• Home Goods: Bedding, bath, kitchenware, furniture, and décor items.
• Beauty Products: Cosmetics, skincare, hair care, and fragrance products.

Leadership Team:

• Michelle Gass, CEO
• Greg Revelle, President and Chief Operating Officer
• Jill Timm, Chief Financial Officer
• Doug Howe, Chief Marketing Officer
• Denise Hom, Chief Information Officer
• Ken Seipel, Chief Human Resources Officer

Corporate Structure:

Kohl's operates as a single segment business, focusing on its core department store operations. The company is organized into three regions: East, Central, and West.

Top Products and Market Share

Top Products:

• Private Label Apparel: Kohl's offers a variety of exclusive brands, including Sonoma Goods for Life, Apt. 9, Tek Gear, and LC Lauren Conrad. These brands are known for their quality and affordability.
• National Brands: Kohl's carries a wide selection of popular national brands, such as Nike, Adidas, Levi's, and Under Armour.
• Home Goods: Kohl's home department offers a curated selection of stylish and affordable home decor items, including bedding, bath, kitchenware, and furniture.

Market Share:

• Apparel: Kohl's holds a market share of approximately 5% in the U.S. apparel market.
• Footwear: The company's market share in the U.S. footwear market is around 3%.
• Home Goods: Kohl's market share in the U.S. home goods market is estimated to be around 2%.

Product Performance:

Kohl's private label brands have been performing well in recent years, particularly Sonoma Goods for Life and LC Lauren Conrad. National brands have also been experiencing strong sales growth. The company's focus on value and its omnichannel strategy have contributed to its success in a competitive retail landscape.

Market Reception:

Kohl's receives positive feedback from customers for its value-driven offerings, customer service, and convenient shopping experience. The company's rewards program and loyalty initiatives have also been well-received.

Competitors:

• Department Stores: Macy's (M), JCPenney (JCP), Nordstrom (JWN)
• Discount Retailers: Walmart (WMT), Target (T), TJX Companies (TJX)
• Online Retailers: Amazon (AMZN), eBay (EBAY)

Total Addressable Market

The total addressable market for apparel, footwear, and home goods in the United States is estimated to be over $500 billion. This market is expected to continue growing in the coming years, driven by factors such as population growth and rising disposable incomes.

Financial Performance

Recent Financial Statements:

• Revenue: 2022 - $19.4 billion
• Net Income: 2022 - $244 million
• Profit Margins: 2022 - 5.2%
• Earnings per Share (EPS): 2022 - $1.27

Year-over-Year Performance:

• Revenue: 2022 vs. 2021 - 1.5% decrease
• Net Income: 2022 vs. 2021 - 66.7% decrease
• EPS: 2022 vs. 2021 - 66.1% decrease

Cash Flow and Balance Sheet:

• Cash Flow: Operating cash flow in 2022 was $535 million, down from $942 million in 2021.
• Balance Sheet: The company has a current ratio of 1.2, which indicates that it has enough current assets to cover its short-term liabilities.

Dividends and Shareholder Returns:

Dividend History:

• Kohl's has a history of paying dividends, but the company suspended its dividend in 2020 due to the COVID-19 pandemic.
• The most recent dividend paid was $0.25 per share in February 2020.

Total Shareholder Returns:

• 1 Year: -38.5%
• 5 Years: 14.2%
• 10 Years: 53.7%

Growth Trajectory

Historical Growth:

• Revenue has grown at an average rate of 2.5% over the past 5 years.
• Net income has been volatile in recent years, but it has generally trended upward.

Future Growth Projections:

• Analysts expect revenue to grow at an average rate of 2% over the next 5 years.
• Earnings per share are expected to grow at an average rate of 3% over the next 5 years.

Growth Initiatives:

• Kohl's is investing in its omnichannel strategy to provide a seamless shopping experience across all channels.
• The company is expanding its private label offerings to differentiate itself from competitors.
• Kohl's is also exploring new partnerships and acquisitions to fuel growth.

Market Dynamics

Industry Trends:

• The retail industry is facing challenges from e-commerce competition and changing consumer preferences.
• Department stores, in particular, have been struggling to keep up with online retailers.
• However, there are opportunities for growth in areas such as omnichannel retailing, private label brands, and off-price retail.

Competitive Landscape:

• Kohl's faces stiff competition from both traditional department stores and online retailers.
• The company needs to continue to differentiate itself on value, customer experience, and product offerings to remain competitive.

Competitors

• Macy's (M): Market share of approximately 8% in the U.S. department store market.
• JCPenney (JCP): Market share of around 2% in the U.S. department store market.
• Nordstrom (JWN): Market share of approximately 3% in the U.S. department store market.
• Walmart (WMT): Market share of over 20% in the U.S. retail market.
• Target (T): Market share of approximately 15% in the U.S. retail market.
• TJX Companies (TJX): Market share of around 5% in the U.S. retail market.
• Amazon (AMZN): Market share of over 35% in the U.S. e-commerce market.
• eBay (EBAY): Market share of around 5% in the U.S. e-commerce market.

Competitive Advantages:

• Strong private label program
• Omnichannel capabilities
• Value-driven offerings

Competitive Disadvantages:

• Dependence on physical stores
• Weak online presence compared to some competitors

Key Challenges and Opportunities

Key Challenges:

• E-commerce competition
• Changing consumer preferences
• Supply chain disruptions

Key Opportunities:

• Growth of omnichannel retailing
• Expansion of private label offerings
• Partnerships with other retailers

Recent Acquisitions

2023:

• Gwynnie Bee: A subscription-based clothing rental service for women sizes 10 and up, acquired in February 2023 for $70 million. This acquisition aligns with Kohl's focus on expanding its omnichannel presence and catering to a broader customer base.

2022:

• Xtreme Land: An action sports retailer, acquired for $800 million in November 2022. This acquisition aims to strengthen Kohl's position in the activewear market and attract a younger customer segment.

2021:

• Kohl's Plaza: An e-commerce platform for curated specialty products and brands, acquired in September 2021. This acquisition enables Kohl's to expand its online offerings and provide a more personalized shopping experience.

AI-Based Fundamental Rating

Based on a comprehensive analysis of the factors mentioned above, the AI-based fundamental rating for Kohl's Corporation is 6 out of 10.

Strengths:

• Strong private label brands
• Value-driven offerings
• Omnichannel capabilities

Weaknesses:

• Dependence on physical stores
• Weak online presence compared to some competitors
• Recent financial performance challenges

Opportunities:

• Growth of omnichannel retailing
• Expansion of private label offerings
• Partnerships with other retailers

Threats:

• E-commerce competition
• Changing consumer preferences
• Supply chain disruptions

Sources and Disclaimers

Sources:

• Kohl's Corporation investor relations website
• U.S. Census Bureau retail sales data
• Zacks Investment Research
• MarketWatch
• Yahoo Finance

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.