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Kohl’s Corporation (KSS), Macy’s, Inc. (M): What Makes This Retailer a Good Bet?

Kohl’s Corporation (NYSE:KSS) stock price has increased by 16% in the last six months, outperforming the S&P 500. Its first quarter results were mixed as comparable sales were negative, but its gross margin still beat the consensus estimates by 50 basis points.

Kohl’s Corp. call options active as shares sell offThe sales decline that the company experienced last quarter can be attributed to the bad weather conditions whose impact was felt across the industry; as per the Consensus Bureau, department store sales declined 7.6% in March following the 4.6% decline in February. The one-time impact of the weather aside, the company presents an attractive investment opportunity.

Kohl’s Corporation (NYSE:KSS) has appointed a new officer for customer acquisition with increased marketing spending and investment in the Omni-channel network. It has also focused on moms, which provides a very large and loyal customer base for the company. Let’s discuss some of the initiatives taken by the company in detail.

Newly appointed Chief Customer Officer will play key role in customer acquisition

Kohl’s Corporation (NYSE:KSS) has created the new role of Chief Customer Officer and recruited Michelle Gas for this role. She has 16 years of experience with Starbucks Corporation (NASDAQ:SBUX) at leading positions and has played a key role in customer loyalty and social media initiatives for the coffee giant.

She has focused initially on the company’s merchandising and marketing efforts. Kohl’s Corporation (NYSE:KSS) is focusing more on stocking in-depth assortments of merchandise rather than a simple mix of different merchandise. It has decided to increase its marketing spending for the second quarter to provide more national advertising of its brands. It will also extend the testing of its non-credit loyalty program to 200 stores from the current 100 stores. These efforts will help it acquire new customers and retain its present customer base.

Investment in Omni-channel network will drive e-commerce sales

The e-commerce platform is the biggest growth driver for the company, showing a 31% increase this year above its 40% growth in 2012. It is expected to grow 35% this year as well with emphasis on additional fulfillment centers and in-store kiosks. The company has invested in additional infrastructure to fulfill online orders and to extend its shipments from stores to 200 stores. It also has plans to invest in a new point-of-sale system that will help it to track in-store inventory with global inventory visibility. Contributing 8% of total sales, the e-commerce platform will be a growth driver as Kohl’s Corporation (NYSE:KSS) makes an increased investment in technology.

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