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Why Kohl’s Corporation (KSS) Stock Is the Best of the Worst

Investors should avoid Kohl's stock even though the firm is faring better than its peers

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Department stores are dying a slow and painful death at the hands of e-commerce giant, Inc. (NASDAQ:AMZN). While big names like Macy’s Inc (NYSE:M) have been taking most of the heat, Kohl’s Corporation (NYSE:KSS) is navigating the same choppy waters. KSS stock has been able to avoid some of the pitfalls that Macy’s is struggling with, but the fact remains that the company has yet to figure out a way to assure its place in the future of retail.

One major thing that Kohl’s has going for itself is its physical locations.

Counting a retailer’s brick-and-mortar stores as a positive is rare these days, but for KSS stock, that’s true. Unlike its other department store competitors, Kohl’s locations are found in suburban strip malls. That means the company hasn’t been hurt by falling foot traffic in traditional shopping malls.

According to CEO Kevin Mansell, 80% of Americans live within 15 miles of a Kohl’s. That means come back-to-school shopping season, KSS may be able to grab some market share because other stores have been rapidly decreasing their physical footprints. Kohl’s, on the other hand, has said it would be better to shrink its store sizes, cut down on inventory and focus on only a few brands rather than close locations.

Another Reason KSS Stock Is Decent?

Speaking of brands, Kohl’s has been shifting its focus toward big name brands that will draw customers in. Under Armour Inc (NASDAQ:UAA) recently made a deal to sell athleisure gear and sneakers in Kohl’s locations, a move that has been mutually beneficial. For KSS, the addition of UAA products has increased customers’ interest in the department store’s entire range of fitness gear.

Now, with the back-to-school season ramping up, Kohls is planning to offer Clarks shoes at its locations. This is likely to be another boon for KSS stock as the specialized shoes will probably draw in customers doing their back-to-school shopping.

The other big reason Kohl’s focus on getting famous brands into its aisles is import is that it gives people a reason to shop in a department store. Part of the reason that shoppers are abandoning big box stores is that they feel antiquated. However, offering a selection of hot items could help boost the company’s image.

When you look at these factors, KSS stock doesn’t look like a terrible buy. That’s especially true when you consider that last quarter’s results showed that margins increased by 83 basis points from the year previous.

Then there’s the firm’s 5.2% dividend yield, another reason some investors are taking a chance on Kohl’s stock.

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Article printed from InvestorPlace Media,

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