Kohl's Posts Big Profits on Strong Store Brand Performance

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November 15, 2011

Store brands made up more than half of all sales at Kohl’s during its third quarter as profits jumped 20 percent thanks in part to Jennifer Lopez and Marc Anthony.

“We launched the Jennifer Lopez and Marc Anthony brands in mid-September,” said Kevin Mansell, chairman and CEO. “The brands launched in all stores and online concurrently and across multiple departments, making it the largest launch in our history in breadth of content.”

Lopez and Anthony’s products debuted in stores in September and were Kohl's biggest rollouts of exclusive products to date, encompassing virtually every merchandise category that the stores carry. The initial rollout included Anthony’s lines in men’s apparel and hers in apparel footwear and home. Expectations are for the line to expand into luggage and accessories for the Jennifer Lopez collection.

“It also met our very aggressive sales goals and exceeded the size of any previous brand launch by a substantial degree in sales,” he said. “Both brands are performing very well, and we're excited by the newness that they bring into the holiday season.”

Kohl’s has continued to build on its private label success. “Our private and exclusive brands continue to increase in penetration as they were approximately 51 percent of our sales in the third quarter, up approximately 270 basis points,” said Mansell, discussing financial reports in a conference call with analysts. “In our private brand portfolio -- Apt. 9, So and Urban Pipeline -- all reported double-digit increases.” Kohl’s also counts the FILA SPORT, Food Network, Lauren Conrad, Mudd and Simply Vera Wang in its exclusive brands portfolio.

Lopez and Anthony announced their pending divorce after the Kohl’s collection was well underway. The once dynamic duo is going forward with the lines despite the break up.

Kohl’s net income for the quarter increased 20 percent to $211 million, compared to $176 million a year ago. Net sales were $4.4 billion, 3.8 percent over the comparable prior year quarter and comparable store sales for the quarter increased 2.1 percent.

Store brands and their higher margins can take credit, in small part, for boosting margin and contributing to that 20 percent increase in profits. “The launch of our Jennifer Lopez and Marc Anthony brands during the quarter met our aggressive sales plans,” said Mansell. “We expect our collection of powerful brands supported by significant marketing investments, especially in broadcast and digital media, to deliver a strong Holiday season.”

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