At its recent Investor Day, Kohl’s management team brought out the leaders at Adidas, Under Armour, Eddie Bauer, Columbia Sportswear, Levi Straus, and Lands’ End to underscore its commitment to being retail’s authority in casual and active categories.

Each gave brief video testimonials included as part of the retailer’s three-hour presentation.

  • Kasper Rorsted, CEO, Adidas: “Kohl’s is a great partner for Adidas because Kohl’s serves families all across America and they’re one of our most important wholesale partners worldwide…Kohl’s is such a valuable alliance partner to us because they serve a very important consumer segment, the active consumer, and we are achieving fantastic results together.”
  • Damien Huang, CEO, Eddie Bauer: “We had a fantastic launch in 2021, and, with that, overwhelming proof of concept. We believe we can build a year-round outdoor outfitting destination within Kohl’s.”
  • Stephanie Pugliese, president, Americas, Under Armour: “Kohl’s has executed very well in staying ahead of the changing dynamic of consumer behavior…Kohl’s focus on a differentiated omnichannel experience gives them the opportunity to be best in class with the consumers they serve…In Kohl’s, we have a partner that listens, collaborates and executes well, setting the stage for mutual success in the future.”
  • Tim Boyle, CEO, Columbia Sportswear:Kohl’s leads the way in terms of offering apparel that is performance, yet casual….And Kohl’s is one of those few who are so innovative that they would invite a big competitor to come into their store. That would be Amazon.”
  • Jerome Griffith, CEO, Lands’ End: “We only have a couple of partners, and Kohl’s was quickly a ‘yes’ in our minds…By bringing in some great athletic brands, some of the best casual brands, and bringing in Sephora, Kohl’s has done a great job of being able to have both online and in-store demand…The consumer is going to continue to look for casual, to look for active, to look for an easy shopping experience. And Kohl’s as a partner has that availability.”
  • Chip Bergh, CEO, Levi’s: “Kohl’s presence with 1,100 stores is super important to us. We couldn’t do it without partners like Kohl’s…They execute really well. How our brands show up in our customers’ stores really matters to us….Casualization, the trend towards lifestyle, is here to stay, and, I think Kohl’s is extremely well-positioned to capitalize on that.”
  • Testimonials also came from Jean-Andre Rougeot, president and CEO, Sephora Americas; fashion designer Vera Wang; and Lauren Conrad, reality TV star and fashion designer.

As Kohl’s updated investors on a strategic plan announced in October 2020 to accelerate growth and profitability, which centered around a “new vision to be the most trusted retailer of choice for the active and casual lifestyle” that included a goal of driving active categories to be at least 30 of its business, up from 20 percent in 2019. Kohl’s also set a goal to achieve operating margins in the range of 7 percent to 8 percent.

“Kohl’s, in the mind of the customer, has always been a casual brand. And over the last five years, we’ve also proven we can be a credible player in the active business,” said Michelle Gass, Kohl’s CEO, at the event. “So now we are evolving the entire Kohl’s brand proposition to stand for the active and casual lifestyle. And the pathway we’re already on to be a leader in active and casual before the pandemic has only become more relevant as consumer trends accelerated during the last couple of years. It’s how people are living and dressing today.”

She pointed to Kohl’s recent research that showed 86 percent of U.S. consumers regularly wear athleisure to work, 69 percent describe their wardrobe as “casual” or “comfortable,” and 49 percent said they plan to dress more comfortably when they return to the office.

Gass added, “I think we can all personally relate to this. While you may dress up a bit more than you were when you were taking a Zoom call from your home office, you may still want to wear sneakers into the office versus dress shoes or wear a blazer made with materials that have stretch and performance fabric but still look great. For Kohl’s, standing for active and casual means we will offer solutions from active, athleisure, denim, and fashion to fulfill the needs of today and tomorrow.”

She added, “And this creates big opportunities for Kohl’s. We expect these trends will live on well into the future. We’ll work with our big national brand partners like Levi’s and Nike to ensure that we’re bringing the best, most relevant trends and styles to meet our customer needs. We’ll evolve our category and brand portfolio to deliver on this mission.”

Doug Howe, chief merchandising officer, cited four steps Kohl’s is taking to become “the active and casual destination for the family,” including:

  1. Building a sizeable beauty business;
  2. Driving continued growth in active;
  3. Reigniting growth in women’s; and
  4. Creating a destination for perpetual innovation and discovery.

The active category grew 40 percent in 2021 and is now at almost 25 percent of Kohl’s annual revenues. Sales of active have grown at more than a 10 percent CAGR (compound annual growth rate) from $2.7 billion in 2016 to $4.4 billion in 2021. Active accounted for 24 percent of sales in 2021, up from 14 percent in 2016.

“We surpassed $4 billion in sales in 2021,” said Howe of the active category. “And the category is more productive and faster turning than the company average.”

Investments to drive further growth in active include repositioning active at the front of the stores, adjacent to its expanding Sephora in-store shops; elevating assortments;  adding additional space in the store; and investing to enhance the in-store environment.

“Our mission is to be the active lifestyle authority for every family,” said Howe. “We will do this in three ways. We will continue to advance our active leadership by continuing to nurture and grow the strong relationships we have today with Nike, Under Armour, Adidas, and Champion. We will continue to lean into the strong private label brands we have in Tek Gear and FLX. Secondly, we will amplify athleisure, a trend that shows no signs of weakening. And third, we will expand our outdoor offerings led by Eddie Bauer, Lands’ End and Columbia.”

Eddie Bauer will expand to its approximately 1,100 stores this year after being introduced last fall in 500 doors. Kohl’s also introduced Tommy Hilfiger and Calvin Klein over the last year and both brands are expanding space and assortments in 600 stores. Toms and Cole Hahn have also recently been added to Kohl’s mix.

The opening of Sephora in-store shops is helping Kohl’s attract new and younger customers shopping other categories over-indexing in active and in women’s. Kohl’s opened 200 Sephora in-store shops in 2021 and plans to add 400 more this year reaching a minimum of 850 by 2023.

The doors that have added a Sephora shop are showing mid-single-digit lifts to overall store sales. A quarter of Sephora in-store shop customers are new to Kohl’s and the customers skew younger and more diverse. Said Howe, “We are on a path to grow a $2 billion business with Sephora.”

The plan to revive growth in its women’s business includes becoming a leader in women’s casual apparel, significantly increasing its dress business, expanding outerwear and swimwear, and investing more in plus sizes.

Howe said women’s was “set up for success last year but was disproportionately impacted by massive supply chain disruptions.” The women’s category still showed “impressive underlying metrics of performance,” including driving growth in active, intimates and bottoms. The women’s category, also in 2021, delivered historic high margins, regular price sell-throughs, inventory turnover, and productivity rates. Said Howe, “We have never been more confident in the strategy we have in place to reignite women’s.”

Other growth priorities detailed at the meeting included the opening of more than 100 new smaller format Kohl’s stores over the next four years. The stores are expected to be about 35,000 square feet versus the retailer’s average of 80,000 square feet and are seen as a $500 million opportunity.

In existing stores, Kohl’s plans to continue with store refreshes and is launching innovation zones designed to inspire curations of cross-category products and brands with a focus on diverse-owned brands.

Online, Kohl’s set a goal to grow its digital business to $8 billion, up from $6 billion currently, by enhancing discovery and shopability on Kohls.com. Self-serve buy online, pick up will be rolled out to all stores in 2022 and self-serve returns and check-out continue to be tested. Kohl’s will continue to accept returns from Amazon as it considers the service a strong driver of new customer acquisition.

Kohl’s also announced plans by 2025 to reach net-zero emissions and enhanced its goal to triple its spending with diverse suppliers.

Kohl’s long-term outlook calls for low-single-digits percent sales growth, 7 percent to 8 percent operating margin and mid-to-high-single-digit percent EPS growth.

Photo Michelle Gass, Kohl’s CEO, courtesy Kohl’s