Kohl’s Corp. has announced the upcoming launch of a new athleisure brand, FLX, part of a renewed focus on the “casual lifestyle” category.
FLX, which will be available in stores and online starting March 2021, will include gear for men and women, and be made with sustainable materials and processes.
“As customers have been increasingly shopping for a more comfortable and casual lifestyle, Kohl’s identified a plan to more aggressively serve as the most trusted retailer of choice in these categories,” said Doug Howe, Kohl’s KSS, +6.60% chief merchandising officer, in a statement.
The news sent Kohl’s stock up 6.6% in Tuesday trading.
Kohl’s has made a number of merchandise and brand announcements in 2020, including news earlier this year that the department store retailer would eliminate eight brands, including Jennifer Lopez, in favor of active items.
The company aims to make the active category 30% of its business.
Through the COVID-19 pandemic, there have been analyst concerns about the department store category, and about Kohl’s specifically.
Kohl’s also unveiled an investor presentation on Tuesday that details the company’s goals for driving sales growth by zeroing in on the active and casual lifestyle. That includes expanding in the active and outdoor categories, building its beauty business and grabbing market share.
The company is also further developing its digital capabilities, with digital sales growing by more than 100% over the last five years to $4.5 billion.
Kohl’s says it added 4 million new digital customers in the first half of 2020, and fulfilled half of its digital sales through stores in the second quarter of this year.
Kohl’s stores will continue to be a relevant piece of the business plan, as its returns partnership with Amazon.com Inc. AMZN, +0.30% steers traffic to bricks-and-mortar locations and the retailer introduces new services, like Store Drive Up that allows customers to pick up an order. Store Drive Up was launched in April.
The company says 80% of Americans live within 15 miles of a Kohl’s store, and 95% of its locations aren’t located at a mall. There are 1,149 Kohl’s stores across 49 states.
The retail category has been upended by the coronavirus pandemic, with stores closed either temporarily or permanently, shoppers migrating more of their purchasing to e-commerce and consumers buying more in categories like home and comfy clothing.
Kohl’s investor presentation lays out a plan to capitalize on the industry upheaval. The company is also taking steps to continue to reduce costs and find efficiencies in marketing, store labor and technology.
In 2019, Kohl’s reached $20 billion in sales but same-store sales fell 1.3%.
“We are encouraged by Kohl’s business plan update, which leans into the retailer’s strengths, works to build on pockets of growth opportunities, and addresses margin enhancing opportunities,” wrote Cowen analysts.
“Furthermore, we believe Kohl’s convenient off-mall footprint with a healthy store base prior to the pandemic, leading loyalty program, and expert omni-channel execution help fortify the retailer for the future.”
And with thousands of store closures, Cowen analysts say there is market share up for grabs for Kohl’s and other retailers.
Cowen rates Kohl’s stock market perform with a $24 price target.
Kohl’s stock has slumped 59.5% for the year to date. The S&P 500 index SPX, +0.47% is up 6.6% this year.