Kohl's 2008 Annual Report Download - page 4

• Gold Toe – a national hosiery brand
In 2009, Kohl’s is expected to become the exclusive U.S. retailer for the following brands:
• Dana Buchman – a classic lifestyle brand, which spans several categories, including women’s apparel,
intimate apparel, accessories, and footwear, launched in February 2009. Ultimately, the brand may
extend into home, beauty and fragrance categories.
• Hang Ten – a California lifestyle collection for young shoppers is expected to be available in April
2009
• Mudd – expansion of Kohl’s current Mudd merchandise assortment in apparel, accessories, jewelry and
domestics is expected to be available beginning in July 2009.
Our marketing initiatives are designed to differentiate Kohl’s in the marketplace while maximizing the
return on our marketing investment. Our 2008 marketing efforts, especially during the holiday season, were
designed to showcase Kohl’s as THE one-stop destination for shoppers looking to get the most for their money
during a challenging economic environment. We continued to target our most loyal customer – the Kohl’s charge
card customer. We also emphasized our flexible return policy.
Our inventory management initiatives are designed to ensure that we have the right inventory, in the right
stores, at the right time. Size optimization is focused on ensuring that each of our individual stores has inventory
in the correct style, color and size. Markdown optimization is focused on pricing clearance items at the
appropriate price for each location’s inventory and sales history. Another important inventory management
initiative is to increase our speed-to-market through our “Concept to Customer” initiative which allows us to
develop and deliver product quicker, while meeting our customers’ needs and remaining trend right. Since
launching our cycle time reduction initiative, we have achieved a 10-15 week reduction in cycle time, with the
majority of our products designed and delivered to our stores within 32 weeks. Brands requiring “fast-fashion”,
such as ELLE, are developed in as little as 12-16 weeks. During 2008, we aggressively managed our inventory
levels by reducing seasonal inventory levels, while maintaining levels in basic areas such as hosiery and
underwear. As a result of strong inventory management and cycle time reductions, clearance inventory levels
were also down significantly compared to 2007.
The objective of our in-store shopping experience initiatives is to satisfy the changing needs and
expectations of our customers. Practical, easy shopping is about convenience. At Kohl’s, convenience begins
even before the customer enters the store, with a neighborhood location close to home. Other aspects of
convenience include convenient parking, easily accessible entry, knowledgeable and friendly associates, wide
aisles, a functional store layout, shopping carts/strollers and fast, centralized checkouts. Our new point-of-sale
(“POS”) system was installed in all stores in 2007. The face-to-face customer interaction, touch screens,
signature capture, customer display and other features of the new POS system are improving time-in-line
resulting in a modern, efficient and improved customer experience. The physical layout of the store and our focus
on strong in-stock position in style, color and size is aimed at providing a convenient shopping experience for an
increasingly time-starved customer.
In 2006, we introduced a new “innovation” store design to make our stores more visually exciting and easier
to shop. Enhancements included new and updated exteriors; improved fitting rooms, lounges, restrooms and
customer service areas; and specialty fixturing including new residential-styled home hutches. We have also
updated the junior’s area with trendy concrete flooring, a fun lounge area, full wardrobe strikepoints and
additional cross-shopping opportunities; redesigned our center core to improve sightlines throughout the store;
and introduced upgraded fixturing and wayfinding signage. In 2008, our in-store shopping experience efforts
were focused on improving customer service scores.
For discussion of our financial results, see Item 7, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.”
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