Kohl’s To Open 100 More Stores, But They Will Be A Lot Smaller

As Kohl’s (KSS) looks to evolve amid a changing retail landscape, the department store chain announced plans to open more than 100 new stores, albeit smaller locations over the course of the next four years.

Shares of Kohl's plunged Monday on its strategic growth plan. As of 12:54 p.m. ET, shares of Kohl's were trading at $52.74, down $6.03, or 10.25%.

The news from Kohl’s came ahead of its investor day as it gave updated financial goals and also announced plans to expand its partnership with Sephora from 200 to 850 stores with shop-in-shop sites by next year while growing the beauty business to $2 billion in annual sales.

The plans to open the smaller-format stores are part of an effort to leverage its existing customer base while also attracting new shoppers with buy online, pick up in-store, and self-checkout services, which it currently offers at most of its 1,100 stores in the U.S.

CEO Michelle Gass told CNBC that the smaller format stores will be about 35,000 square feet, compared to a typical Kohl’s store which measures around 80,000 square feet, with one of the first being tested in the Seattle area.

Kohl’s has faced pressure from activist investors who have publicly criticized its management and performance, calling for a sale of the company.

“Make no mistake, this is a transformation,” Gass said during the virtual investor meeting, CNBC reported. “It is a complete reinvention of our business model and our brand.”

Kohl’s said it is projecting a low-single-digit percent sales growth going forward with a 7% to 8% operating margin and operating cash flow of more than $5.5 billion and about $2.5 billion of free cash flow from 2022 to 2024.