Kohl's New Store Expansion to Conquer California

Last Updated Sep 30, 2009 7:10 PM EDT

Kohl's today makes a statement in the Golden State, opening 30 new locations in California and boosting its total there to 121 as part of a 37-store roll out that also encompasses Florida, Louisiana, Nevada, Texas and Utah.

The expansion is the fruit of Kohl's Mervyns acquisitions in late 2008, when after year's of struggle, that retailer succumbed. Of the 37 stores debuting, 35 are former Mervyns locations including all 30 across California.

In Sacramento, as part of the larger opening event, Kohl's is debuting its 59th "solar" location, so called by the company for the 990-panel, 206-kilowatt solar array that fits the store out to generate almost 50 percent of its energy needs. Just under half of Kohl's California stores qualify for solar status, and the company now operates a total of 79 such environmentally friendly locations nationwide.

Kohl's has been weathering the recession better than most lower-tier department stores and done some significant capital spending. In an August conference call, as transcribed by SeekingAlpha, CEO Kevin Mansell spelled out the strategy behind the current round of store openings:

We will open up 56 stores in 2009. Nineteen of those stores were open in the spring, and the remaining 37 stores, mostly former Mervyn's stores, will open in late September. Former Mervyn's stores will put us in a stronger position to be the retailer of choice in California and in the Southwest. We've gained a tremendous amount of traction this spring in that effort prior to the opening as California and the Southwest led the company in comparable store sales. We plan on leveraging the new store openings across the existing store base to highlight our improved convenience and raise top-of-mind awareness levels of Kohl's.
Kohl's has been busy on the product development side, too, preparing for this month's launch of its LC Lauren Conrad collection in 300 stores initially and on Kohls.com. Plans call for it to expand to all stores in the coming months. The line, from actress turned designer Lauren Conrad, is backed by a marketing campaign centered on YouTube presentation for her Kohl's effort that are linked to videos for a cosmetics brand she backs. Combined, the two campaigns provide a joint fashion platform that bolsters their presence online and draws diverse viewers.

During the conference call, Mansell detailed other brand initiatives Kohl's has lately rolled out, saying:

We've been able to launch our new Mudd brand just in time for back to school. The addition of Mudd to our portfolio of world-class brands furthers our mission to offer customers quality, exclusive brands at exceptional value. We are supporting the launch with an integrated marketing campaign utilizing tab, broadcast, direct mail, e-mail and Kohls.com, as well as in-store strike points and graphics.

We also continue to beat our [sales] plans in the recent launch of Dana Buchman, which is in women's apparel, intimate accessories and footwear. We were still able to enjoy significant growth with Chaps at the same time.

April saw the launch of Hang 10 in nearly 240 Kohl's stores and on kohls.com. Hang 10 is a California lifestyle collection for young shoppers, which we hope to expand to all stores in spring of 2010.

By the way, LC Lauren Conrad is billed as a California chic brand. For awhile, Mervyns styled itself Mervyns California. It seems like Wisconsin-based Kohl's is betting the West Coast affiliations can provide nationwide attention.