Kohl's Targets California with Spears, New Stores

(MoneyWatch)  Kohl's is going Hollywood, so to speak, using its recent acquisition of Mervyns stores to establish a more powerful presence in California and promoting a decision to make Britney Spears the spokesperson for its Candie's brand.

Kohl's is out to increase market share and has shown a disposition to snatch new real estate and empty stores at bargain prices. It snapped up 31 former Mervyns locations at auction late last year and has grabbed five more since. Like rival J.C. Penney, Kohl's will continue to add stores despite the recession in the hopes of winning over customers who used to shop liquidating retailers such as Mervyns and Linens 'N Things, as well as those cast adrift by still-operating chains that are shedding stores, such as Macy's. Kevin Mansell, Kohl's president and CEO, said during a Feb. 27 conference call announcing year end results that the company is ready to move on more real estate if other retail failures make strong locations available.

With its Mervyns acquisitions, Kohl's intends to emerge as the "retailer of choice" in California, said R. Lawrence Montgomery, Kohl's chairman. He characterized many of the Mervyns locations as "irreplaceable" because they reside in highly populated communities where few or no opportunities exist to build new stores.

In total, Kohl's plans to open 55 stores in 2009 including the 36 former Mervyns locations. In October, it plans to open about 30 of the total in California.

Just three days after the conference call, Kohl's announced that Spears would star in print, television, in-store and online marketing for the Candie's, its juniors brand. Spears also will appear clad in Candie's apparel, footwear and accessories in an upcoming music video. Kohl's and Iconix, which controls the Candie's brand and licenses it exclusively to the retailer, will be among the sponsors of Spear's current tour. A pre-tour video presentation already is running on Candies.com.

Signing Spears is a high-profile move, but Kohl's has had success in increasing sales among its exclusive brands recently so the ensuing publicity also could boost it in the struggle for market share. J.C. Penney particularly has been pursuing younger consumers, those Candie's targets.

So, now Kohl's backers only have to ask themselves one question, given recent setbacks as regard's California real estate and Spears' performances: Is Kohl's taking a bigger risk on the Golden State's or Britney's come back?