The retailer plans to slow its store expansion plans and won't reach its previously announced goal of 1,400 stores by 2012, chairman and chief executive officer Larry Montgomery said. "We're probably going to take a couple of years longer than we originally planned to get to that," Montgomery said following the company's annual meeting at the Milwaukee Theater here. The 957-unit retailer will take the pulse of the economy each year and adjust its store opening plans accordingly, he said.
The $16.5 billion Kohl's has been adding 95 to 100 stores annually in recent years, but will open only about 75 stores this year because of the economic climate. By the end of the year, the company will reach 1,000 stores, including an entry into the Miami-Fort Lauderdale market. Last year, Kohl's opened 112 stores.
Kohl's is not alone in scaling back store openings. Last month, J.C. Penney said it would reduce openings to 36, from 50, leading to a savings of $200 million in capital expenditures. Penney's has slated 20 major store renovations, down from the 65 originally planned.
As competitors close stores, Kohl's, based in Menomonee Falls, Wis., will take advantage of real estate opportunities, said Montgomery. "We have a pecking order," he said, but he declined to say which competitor's locations were on his list.
Despite the difficult economy, exclusive brands are the fastest-growing part of Kohl's business, Montgomery said, calling the performance "spectacular."
Chaps sales are rising by double digits, despite new competition from Penney's launch of American Living, a Ralph Lauren brand, Montgomery said. Rollouts of names such as Elle, Simply Vera Vera Wang, Food Network and others have pushed the percentage of brands exclusive to Kohl's from zero three years ago to nearly 11 percent at the end of last year.
Kohl's' private label brands accounted for 28 percent of total sales in 2007. This year, Kohl's expects the combined percentage of private and exclusive brands to increase to as much as 41 percent of sales, driven by growth of Elle, Food Network and Simply Vera Vera Wang, as well as new products from Bobby Flay, Jumping Beans and Fila Sport.