Kohl’s to open 100 small-format stores, expand Sephora shops

Department store chain Kohl’s said it expects to increase sales by a low-single-digit percentage annually, with plans to open 100 new small-format stores in the next four years and expand Sephora-branded shops to 850, among other moves.

Kohl’s announced its long-term goals on Monday ahead of the company’s annual investor meeting as it faces increasing pressure from activist investors. It did not say where it would locate the smaller stores.

“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,” said Kohl’s CEO Michelle Gass said in a statement.

As part of its plans to spearhead sales growth, Kohl’s said it forecasts its Sephora business to become a $2 billion juggernaut. It opened 200 Sephora at Kohl’s locations last year and plans to add 400 in 2022.

In the Indianapolis area, Kohl’s opened Sephora stores in Greenwood and Southport last year. The retailer’s 2022 list of Sephora openings includes Fashion Mall Commons in Indianapolis, 8141 E. 96th St. in Indianapolis, Anderson, Brownsburg, Westfield, Noblesville and Plainfield.

Sephora’s existing partnership with JC Penney is set to end this year. Penney is replacing Sephora with a new concept called JCPenney Beauty.

Kohl’s, based Menomonee Falls, Wisconsin, also said that it continues to acquire millions of new customers with its partnership with online behemoth Amazon, where it allows shoppers to return Amazon orders at its stores.

Kohl’s also said it plans to build its online business to reach $8 billion.

It also said it’s rolling out self-serve buy online, pick up in store areas to all stores this year, and is continuing to test self-serve returns and check-out sections.

Kohl’s forecasts per-share earnings growth of a mid-to-high single-digit percentage; and operating cash flow of over $5.5 billion, with roughly $2.5 billion of free cash flow between 2022 to 2024.

Kohl’s said in early February that recent offers to purchase the department store chain undervalue its business and said it’s adopting a shareholder rights plan to head off any hostile takeovers.

The shareholder rights plan, which is known as a “poison pill,” is set to expire on Feb. 2, 2023.