The Stakes Are High For Kohl's This Back-To-School Season

Argus’ Christopher Graja believes the back-to-school season, spanning the end of 2Q and the first two months of 3Q, will demonstrate whether Kohl's Corporation KSS “remains a favorite of American moms, or whether they have moved on.”

Graja maintains a Hold rating on the company.

Back-To-School Season

The analyst believes that if the company is unable to achieve better than its peers or at least flat comps during the “second most important shopping season of the year,” the outlook for Kohl’s would become more negative.

Graja pointed out that the company was “on a mission to reverse several years of lackluster performance that came as middle-income shoppers struggled following the recession,” as well as due to the growth of e-commerce and off-price retailer taking share.

Growth Plan

However, the analyst believes that although Kohl’s initiatives to cut costs could help near term profitability, it was unlikely to make in-store shopping more attractive than browsing e-commerce sites “from the couch”.

In addition, Graja believes that “shoppers must have more opportunity to interact with KSS associates throughout the stores and not just at the checkout counter.”

Kohl’s has names its growth plan, which is expected to span over the next several years, its “Greatness Agenda,” which is based on the “pillars” of “amazing product, incredible savings, easy experience, personalized connections and winning teams.”

However, the analyst expressed caution regarding the department store space and the competitive environment.

Full ratings data available on Benzinga Pro.