Yesterday Kohl's KSS announced that it would open its third dedicated e- commerce distribution center in July 2011. Citi is encouraged to see KSS continue to invest in its online business, as online sales grew +51.7% YOY in 2010. KSS remains under-penetrated online relative to its department store peers, and Citi believes that online sales growth will be a key topline driver ahead. Citi reiterates its Buy rating and $69 target price.
KSS currently operates two dedicated e-commerce distribution centers in Monroe, OH and San Bernardino, CA. Today's announcement is included in the company's capex guidance of $1,000M for 2011. As part of KSS' 2011 capex guidance, the company plans to invest a total of $130M in its distribution centers.
E-commerce sales for KSS totaled $717 million in 2010, an increase of +51.7% over 2009. For the year, e-commerce sales represented 3.9% of total sales, vs. 2.8% in 2009. KSS remains under-penetrated online relative to its department store peers, and Citi believes there is opportunity for continued strong growth ahead. In addition to the opening of KSS' third e-commerce fulfillment center, Citi expects online investments in 2011 to be focused on customer-facing enhancements, social media, and mobile.
KSS closed Tuesday at $53.04
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