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Kohl's Expands Off/Aisle Stores to Tap Price-Sensitive Buyers

Per media reports, Kohl’s Corporation KSS has expanded its discount brand, Off/Aisle into the Sunset Crossing shopping center in Waukesha.

The discount chain opened the first Off/Aisle outlet last June in New Jersey and has since added two locations at its home state of Wisconsin. In October, Kohl’s released plans for two more Off-Aisle discount store locations in 2016.

The Off/Aisle stores are different from the typical Kohl's store. The stores are elegant but more basic with polished concrete floors and rapidly changing merchandise. Off/Aisle targets women buyers looking for bargains. There are fewer pieces of each item and the products cannot be returned. Off/Aisle primarily stocks merchandise returned by Kohl’s’ online customers that aren’t sold at its regular stores.

We expect the company to boost sales by expanding stores in areas where customers can experience value shopping.

Of late, the Wisconsin-based company has been struggling to boost the top line. Lower spending on apparel and accessories and a general slowdown in consumer spending are hurting sales at department stores. Weak sales trends and an unseasonably warm winter took a toll on revenues and earnings, leading department store stock prices to tumble.

In addition to the threat from online competitors and changing consumer tastes, the company faces rising apparel costs and contracting gross margins.

Kohl’s carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader retail sector are Abercrombie & Fitch Co. ANF, Vera Bradley, Inc. VRA and Express, Inc. EXPR. While Express sports a Zacks Rank #1 (Strong Buy), Abercrombie & Fitch and Vera Bradley hold a Zacks Rank #2 (Buy).

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ABERCROMBIE (ANF): Free Stock Analysis Report
VERA BRADLEY (VRA): Free Stock Analysis Report
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KOHLS CORP (KSS): Free Stock Analysis Report
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