By Doris Hajewski
MILWAUKEE–Kohl’s home business is the slowest-performing part of the store, largely due to the sluggish economy, Larry Montgomery, chief executive officer, said in an interview after the company’s annual meeting here yesterday.
“It’s been tough for eight or nine months,” Montgomery said, citing slow home sales as a factor. “People aren’t moving. You don’t need new towels.”
But exclusive brands are the fastest-growing part of Kohl’s business, even with the tough economy, Montgomery said.
Rollouts of brands such as Simply Vera by Vera Wang soft home, Food Network kitchenware 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 2007, Montgomery said.
Kohl’s private-label brands comprised 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 total sales.
Chaps’ sales are rising by the double digits, Montgomery said.
Expansion of brands such as Food Network and Simply Vera by Vera Wang, as well as the introduction of the Bobby Flay line, will fuel the growth of the exclusive brands.
That growth will come at the expense of national brands, Montgomery said.
Kohl’s new Food Network line, which launched last year, performed well during the fall season, Kohl’s President Kevin Mansell said during the meeting.
The new Bobby Flay kitchen products line, launched in partnership with the Food Network, began showing up in stores in April, and will be in all stores by May 15. The line has a Southwest flair, in keeping with the celebrity chef’s specialty. It includes cookware, dinnerware, kitchen gadgets, utensils, cutlery, kitchen textiles, kitchen electrics and barbecue tools.
Also new in home this month is bedding for infants and toddlers under Kohl’s new private label, Jumping Jacks. The opening-price-point brand was introduced in infant and toddler apparel earlier this year.
The difficult economy is prompting Kohl’s to slow its expansion plans, Montgomery said. Kohl’s probably won’t reach its previously announced goal of 1,400 stores by 2012, he said.
“We’re probably going to take a couple of years longer than we originally planned to get to that,” Montgomery said. “We’re kind of going to take the temperature of the economy every year.”
As competitors close stores, Kohl’s expects to take advantage of real estate opportunities, Montgomery said.
“We have a pecking order,” he said, but he declined to say which competitors’ locations were most attractive to Kohl’s.
Kohl’s will open about 75 stores this year. By the end of the year, the company will reach 1,000 stores, including an entry into the Miami/Fort Lauderdale, Fla., market. Last year, Kohl’s opened 112 stores.
The retailer is planning conservative sales estimates and bringing down inventories accordingly, Mansell said. Kohl’s expects store inventories to be down by a single-digit percentage rate at the end of the first quarter, he added.