Kohl’s Plans on 30 Stores for Debut
Kohl’s Corp., the rapidly growing department store chain, will make its long-anticipated push into Southern California next March, with plans to open at least 30 stores on a single day, according to developers, city planners and retail experts familiar with Kohl’s strategy.
Kohl’s, based in Menomonee Falls, Wis., has steadfastly declined to give specifics about its expansion into the Los Angeles area. But developers and government officials say they have identified about a dozen sites in which Kohl’s is in various stages of permitting and development, including three in Los Angeles County, four in Orange County and three in the Inland Empire. Kohl’s has already begun building a 652,000-square-foot warehouse in San Bernardino to support the company’s Western expansion.
Analysts say the expected incursion by Kohl’s--considered a hybrid with qualities of both a department store and a discounter--is likely to shake up the retail landscape in the way Nordstrom did when it arrived in the Southland in 1978. Already, with Kmart Corp. having filed for bankruptcy protection and other department stores struggling amid continued encroachment by discounters, the retail landscape is undergoing a major shift.
And the battleground is particularly intense in the Los Angeles area--a $122-billion retail market rivaled only by the New York region.
Target Stores and Wal-Mart Stores Inc. have already made California a major priority, and even beleaguered Kmart is keeping most of its stores open here as it reorganizes under Chapter 11.
“It’s going to get kind of wild out there,” said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., who has been tracking developers’ reports of Kohl’s activity.
Kohl’s, which currently operates more than 380 stores in 29 states, has been expanding rapidly as its annual sales and profit have surged. The company opened 62 stores in its last fiscal year, and is looking to add 70 new stores this year and 80 in 2003, when it also will enter Phoenix and Las Vegas.
As in other regions, Kohl’s is hoping to make a splashy entry with multiple grand openings, a strategy that retailers have adopted to get the most bang for their advertising bucks. Kohl’s currently has no stores in California.
If all the developments come to fruition and Kohl’s opens 30 stores, it would add roughly 5,000 jobs in the area. Some analysts, however, say it will be difficult for Kohl’s to acquire land in certain places it may want to enter.
Some analysts said the California openings will be the largest ever for Kohl’s on a single day.
“It is unprecedented,” said Douglas Gray, president of Eclipse Development Group in Irvine, which intends to build centers in Downey and Monterey Park anchored by Kohl’s. “It is just an amazing undertaking.”
Generally, the company opens its stores in areas outside of malls, making it easy to get in and out of the store. The average store is about 86,500 square feet and employs about 150 workers.
Kohl’s Ventura site, which has been approved by planners but still needs building permits, would be the main anchor in a development that will include a Barnes & Noble, Staples and a Pier One Imports, planner Veronica Alvarado said.
Stores also are expected to open in Ladera Ranch, Downey, Rancho Santa Margarita, La Habra, Fontana and possibly two in Corona and other cities.
For many Southland consumers, shopping at Kohl’s will be a new experience. The stores share some characteristics with discounters, such as moderate prices, centralized checkout areas. But, like department stores, they focus strongly on soft goods, especially apparel.
Kohl’s, which describes itself as a “value-oriented specialty department store,” says its typical customer is women between the ages of 25 and 54 with a family. Observers say Kohl’s targets customers who are very similar to Target shoppers, and often locates near the discounter.
Kohl’s move into California also could mean trouble for Mervyn’s, a department store owned by Target Corp. that competes directly with Kohl’s, said Eric Beder, an analyst with the brokerage firm Ladenburg Thalmann & Co.
While it is not certain that all planned California stores will open, analysts say that Kohl’s is financially sturdy enough to make it happen, although its debt-load has increased. The company earned $495.7 million on net sales of about $7.5 billion in its fiscal year ended Feb. 2.
Kohl’s stock closed Wednesday at $70.91, up 45 cents, in New York Stock Exchange trading.
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Kohl’s Corp. (NYSE: KSS)
* Headquarters: Menomonee Falls, Wis.
* Number of stores: 382*
* Employees: 60,000
* Net sales: $7.49 billion (fiscal 2001)
* Net income: $495.7 million (fiscal 2001)
* Markets entered in 2001: Atlanta; Austin, Texas; Oklahoma City
* New markets in 2002: Boston, Houston, Nashville
* As of Feb. 2
Source: Kohl’s
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Retail Star
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