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Kohl's Strengthens Customer Service

Zacks Equity Research

The specialty retailer, Kohl’s Corporation (KSS), is geared to boost its sales by revamping its customer service. Kohl has set up a new facility dedicated to customer service at Waterview Parkway, which is expected to be operational by late spring of 2014. Moreover, Kohl’s is expanding its footprint into the booming business areas of Dallas and Texas.

The customer service center spans across three stories of two buildings and will have approximately 300 employees who will attend the customers registered under the Kohl Charge program as well as those visiting Kohl’s’ website Kohl.com.  The new facility adds to the customer service centers already located in San Antonio, TX and Menomonee Falls, WI.

We are encouraged by Kohl’s initiative to gear its customer service. It will boost the company’s sales and revenues in the coming quarters.

In May 2013, Kohl’s posted fiscal 2013-first quarter earnings of 66 cents, beating the Zacks Consensus Estimate of 58 cents per share by 13.8%. Earnings were ahead of management’s expectation of 55 cents – 63 cents per share and climbed 5.0% from the prior-year quarter’s earnings of 63 cents per share.

Although Kohl’s suffered soft sales in the earlier months, conditions improved in April due to warm weather. Sales were below management’s expectation, but bottom line rose on the back of gross margin improvement and tight expense control.

Net sales slipped 1.0% from the year-ago level to $4.20 billion, missing the Zacks Consensus Estimate of $4.26 billion. Kohl’s’ comparable store sales declined 1.9% from the prior-year quarter compared to a rise of 0.2% in the year-ago period. Low inventory turnover along with improper pricing and ineffective marketing strategies resulted in soft sales during the quarter.


Kohl’s expects earnings in the range of $1.00 to $1.08 per share, sales to increase in the range of 1%–3% and comparable store sales to increase in the range of 0%–2% in the second quarter of 2013. Kohl’s expects to repurchase shares worth $250.0 million in the same period.

Kohl’s now has a Zacks Rank #3 (Hold). Other retail and wholesale stocks that warrant a look include Harris Teeter Supermarkets Inc. (HTSI), Kroger Company (KR) and Spartan Stores (SPTN). All of them carry a Zacks Rank #2 (Buy).

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Read the Full Research Report on HTSI

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Read the Full Research Report on SPTN

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