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Kohl's will soon accept Amazon returns at all its stores

Kohl's wants a piece of the biggest online retailer's business: its customers' returns. 

The department store chain said Tuesday that it will accept Amazon returns at all its 1,150 stores starting in July, expanding its nearly two-year test of the service from 100 stores. Kohl's said it will accept unpackaged returns and ship the products back to Amazon without cost to the customer. 

Kohl's sees the partnership with Amazon as a way to get people in its doors and maybe get them to buy something while they're there. As for Amazon, it makes returns easier for its shoppers, who can drop off items at the stores without needing to repackage them for shipping.

Shares of Kohl's soared nearly 12 percent after the announcement Tuesday.

It may seem like an unusual tie-up, but more physical retailers have been working with Amazon in the hopes that they can reach the online shopping giant's millions of shoppers. Sears, for example, started selling its Kenmore-branded appliances on Amazon.com. And some clothing and shoe brands, such as Chico's, J. Crew and Nike, have announced deals to sell some of their fashion on Amazon.

Kohl's and Amazon have been working together since 2017, when Kohl's started selling Amazon Kindles, Echos and other gadgets at some of its stores.

Kohl's stores

To boost sales, Kohl's has also been shrinking its stores and renting or selling space to gym operator Planet Fitness and low-priced grocer Aldi, hoping that people working out or picking up bread will also make a stop at Kohl's. There are signs the strategy is working: sales at established Kohl's stores rose 1% during the holiday shopping period.

Analysts at Citi Research said the deal with Amazon is a "positive" one for Kohl's, and likened the department store to a fish: "Better to be swimming alongside than in front of the shark," the analysts said in a note Tuesday.

Kohl's said it won't charge customers for their Amazon returns, even if it has to pack items in boxes.

As part of the deal, Kohl's is also giving Amazon the option to buy nearly 1.75 million of its shares over the next seven years at $69.68 a share, according to a government filing. That's an 8 percent discount from Kohl's Corp.'s closing stock price of $75.48 on Tuesday.

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