Kohl’s is shrinking its stores and adding Planet Fitness gyms

Alicia Farmer
March 7, 2019

In October 2017, Kohl's had set up Amazon stores-within-stores at 10 of its stores across the Chicago and Los Angeles areas, staffed by Amazon sales associates. Target Corp posted a 5.3 percent rise in sales and beat expectations.

The gyms will fill empty space next to Kohl's stores that are getting downsized to bring in retail partners.

Fourth quarter sales at Kohl's were down, but the retailer reported a slight uptick in comparable store sales for the three month period ended February 2. Analysts expected a 0.3 percent increase in comparable store sales.

On an unadjusted basis, the company's profit slid 42 percent to $272 million, or $1.67 a share, from $468 million, or $2.81 a share, during the same quarter a year earlier. Overall, Kohl's said it reduced its outstanding debt by over $900 million last year and extended the deadlines to repay the rest of its bonds by an extra two years, which it said will cut its annual interest payments by approximately $45 million.

The retailer said it expects earnings per share for 2019 between $5.80 and $6.15 per share.

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Rather than close stores, it has shrunk their size - opening smaller locations that are about 35,000 square feet (about one-sixth the size of a typical Macy's store) and reducing the footprint of existing stores to make space for partnerships with other retailers, such as Aldi and Planet Fitness. "Also, we like the strategy to lean further into active, especially partnering with Planet Fitness to build gyms next to Kohl's stores". "We see the Planet Health partnership as an actual win-win", Gass informed analysts on an earnings name Tuesday.

The two companies will not share a front door, but they plan to cross-promote services to their customers.

According to analysts at Jane Hali & Associates, Kohl's is improving its assortment with both private labels and national brands and continues to enhance in-store and mobile experiences for shoppers.

The announcement came Tuesday, and the company is hoping to open up the revamped locations this year. Year-to-date, KSS has gained 7.37%, versus a 11.83% rise in the benchmark S&P 500 index during the same period.

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