Shopping A-Go-Go: Target, Kohl's Make Big Gains

Who says consumers are holding back? Target and Kohl’s both posted strong results that show when marketing and merchandising strategies give people a reason to hit the stores, there’s little holding them back.

Target says its traffic jumped 6.4%, the best quarterly increase since it began reporting the metric 10 years ago. Comparable sales advanced 6.5%, the best gain in 13 years, driven by a 41% boost in digital sales and 4.9% hike in comparable-store sales.

The Minneapolis-based retailer says second-quarter sales hit $17.55 billion, a 7% rise from last year’s $16.41 billion. Net earnings rose 12.5% to $799 million, up from $671 million a year ago.

Amid the robust results, Target raising its forecast for the full year and says it expects to continue to achieve scale from its initiatives — which also include an elaborate store remodel schedule — throughout next year.



Kohl’s, too, posted healthy numbers and seems to have shaken off its slump. It says its blend of national brands, private-label apparel and efforts to make shopping more personal are paying off.

The company says its second-quarter revenue rose 4% to $4.57 billion, from $4.39 billion a year ago. Comparable-store sales climbed 3.1%, with women’s apparel — which has been a soft spot for two years — increasing. And net income leaped 40% to $292 million, compared to $208 million in the year-ago period.

“We are particularly excited about apparel, and a big uptick in kids’ clothing,” CEO Michelle Gass told investors in a conference call. “We’ve seen a sea change in our proprietary brands, which are now roughly two-thirds of our business.”

The Menomonee, Wisc.-based retailer’s proprietary brands include LC by Lauren Conrad, Simply Vera Vera Wang and Apt. 9.

Kohl’s also announced it had reached a deal to begin selling Nine West shoes and accessories next summer. Nike, its biggest national brand, continued to do well, as did Adidas and Under Armour, and the company expects its activewear to outperform heading into the holidays. And it’s adding two new brands — Lego and FAO Schwarz — in the months ahead.

Gass says digital momentum is continuing, and that mobile now accounts for fully 70% of its web traffic, as well as 50% of digital sales. She also claims personalized marketing and merchandising efforts are making the brand more relevant to shoppers.

Other news of note from the conference call:

The company is continuing testing for store improvements in its 58 experimental stores, assessing the results of mobile checkout, wayfinding, in-store lockers for online order pickups, layout changes and new customer service concepts.

Kohl’s is continuing its standard-to-small store “rightsizing” effort. Back in March, it announced a partnership with Aldi, opening grocery stores in ten of these downsized locations. Gass says it is in negotiations with other retailers to lease these empty spaces, as well.

The company expects to benefit from the bankruptcy of Bon-Ton last spring and says it will increase marketing spending in locales where the department store chain had outlets.

Kohl’s also raised its financial forecast for the full year.

Some observers say the company’s healthy numbers mean Kohl’s is doing well sharpening its assortments, giving shoppers exciting reasons to come to stores.

“We have been encouraged by the actions the company has been taking to edit out underperforming lines and to invest in more popular brands like LC Lauren Conrad, where a well-styled summer collection helped to drive sales,” writes Neil Saunders, managing director of GlobalData Retail, in his commentary.

“The revamped LC Lauren Conrad denim range should create further momentum along with interest in exclusive ranges like Simply Vera Vera Wang and Urban Pipeline.”

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