At Investor Day, Kohl’s announced new long-term financial targets and growth strategy that included continued growth in active and casual categories and planned growth for Sephora to a $2 billion business.

“Kohl’s is undergoing a significant transformation of our business model and brand to be the retailer of choice for the Active and Casual lifestyle. We have fundamentally restructured our business to drive sustainable and profitable growth while providing a strong return to shareholders,” said Michelle Gass, Kohl’s CEO. “We have laid the foundation for our winning strategy and have started to implement key initiatives that will scale and accelerate our growth in the years ahead. We delivered record EPS in 2021 and achieved our operating margin goal two years ahead of schedule, reflecting our progress to drive more profitable growth. The initiatives we are announcing today, including plans to drive the Sephora business to $2 billion, are further positioning us for long-term value creation.”

During Investor Day, Kohl’s executives detailed near- and long-term strategic initiatives to accelerate profitable growth, including:

Differentiated Position in Retail
Kohl’s owns a differentiated position in retail and is evolving to be a focused lifestyle concept retailer centered around the Active and Casual lifestyle. Kohl’s said it is modernizing its brand and offerings to fit the needs for how consumers live today and in the future by:

  • driving continued growth in Active and Casual categories;
  • reigniting Women’s through growing its dress business, expanding outdoor and swim categories and amplifying its inclusivity offerings;
  • Elevating and modernizing the customer experience, continuing to refresh its stores and launching Innovation Zones to inspire curations of cross-category products and brands focused on diverse-owned brands; and
  • maintaining leadership in brand loyalty by enhancing its Card Rewards for customers to earn 7.5 percent every day and introducing a co-branded credit card in 2023.

Compelling Partnerships
Kohl’s said it has “compelling partnerships” unique to the industry and that build on the retailer’s “innovative, bold and disruptive spirit” and provide “differentiated experiences” that attract customers by:

  • growing Sephora to a $2 billion business through an expanded store rollout in 850 stores and continued innovation to drive customer growth and engagement;
  • continuing to acquire new customers through its Amazon returns program; and
  • being a destination for iconic national brands and enhancing its product portfolio consistent with its strategy.

Expanding Kohl’s Omnichannel Reach
Kohl’s has a national store fleet and will build on its base of 65 million customers by expanding its store portfolio, building its digital business and increasing relevancy to attract more customers by:

  • opening more than 100 new smaller format Kohl’s stores over the next four years;
  • growing its digital business to $8 billion by enhancing discovery and shopability on Kohls.com;
  • rolling out self-serve/buy online/pick up in-store to all its stores in 2022, and continuing to test self-serve returns and check-out; and
  • expanding its media network to leverage omnichannel capability.

Leveraging Data Science
Kohl’s, as a data-centric company, will take additional steps to increase those capabilities to engage with customers more efficiently and provide greater relevance by:

  • using data to increase personalization and accelerate localization in its store fleet over the next two years; and
  • optimizing data analytics to create more relevant customer experiences, drive revenue and margins, and greater asset efficiency.

Delivering Shareholder Value
Kohl’s is introducing a long-term financial framework focused on shareholder value by delivering:

  • low single-digit percent sales growth;
  • 7 percent to 8 percent operating margin;
  • mid-to-high single-digit percent EPS growth; and
  • operating cash flow of more than $5.5 billion and approximately $2.5 billion of free cash flow from 2022 to 2024.

Capital Allocation Plans
Kohl’s said it is committed to returning “significant capital to shareholders” while investing in initiatives to drive growth. As announced during its Q4 2021 earnings call last week, the retailer increased its dividend by 100 percent, equating to an annual dividend of $2.00 per share, and authorized a $3 billion share repurchase program. In 2022, Kohl’s plans to repurchase at least $1.0 billion.

Long-standing Commitment To Environment, Social and Governance (ESG)
Kohl’s reiterated its commitment to ESG stewardship to create sustainable solutions, giving back and building on its DEI efforts. The company announced plans by 2025 to reach net-zero emissions and to triple its spending with diverse suppliers. Kohl’s will share more details on ESG goals and initiatives in its ESG report published next month, including TCFD and SASB reporting.

Photo courtesy Kohl’s