You probably don't need me to tell you how the retail sector has transformed over the past few years. If you've driven past a mall lately, you know it's pretty grim out there for brick-and-mortar outlets.
In the coming months, over 100 Sears and Kmart stores will close. Popular teen-centric clothing store Forever 21 just filed for bankruptcy protection. Heck, I was on Bed Bath & Beyond Inc.'s (NASDAQ: BBBY) earnings call when management announced the closure of 20 more stores (up from 40).
You can chalk that up to Amazon, or folks going directly to their favorite brands online, or rapid delivery - it's all those things.
But there's always an exception, and now there's one "legacy" retailer that refuses to be broken. The department store just announced some big changes that should add up to one of its best holiday shopping seasons ever.
That makes it the perfect candidate for this kind of trade....
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How Kohl's Is Winning the "Retail Revolution"
At the moment, Kohl's Corp. (NYSE: KSS) stock doesn't paint a pretty picture.
In its latest earnings report, sales were worse than analysts expected, falling 2.9%. Shares are down 23% so far this year, and the company's market cap is dropping.
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But KSS isn't giving up. According to CEO Michelle Gass:
"Stores remain critical to our success and we continue to invest to elevate the overall experience. A big part of how customers are experiencing a modernized Kohl's is through the introduction of new brands and merchandising concepts, and we'll continue to drive that forward."
And that's exactly what the department store is doing ahead of the holiday season.
In 50 of its approximate 1,100 stores, Kohl's is opening a space called "Curated by Kohl's." It will feature six different brands that will rotate in and out over the course of the holidays. The store is also setting up an "Outfit Bar," where a mannequin in a fully dressed outfit will help drive younger shoppers to purchase an entire set. And it's launching a ton of new brands in-house alongside some big names...
Among them is a new home goods brand called "Scott Living," created with HGTV's well-known "Property Brothers." Another is "Koolaburra," the product of a brand partnership with Australian footwear company UGG, selling Sherpa blankets and pillows. One of the most highly anticipated brands is "Ellen DeGeneres Pets Collection" - the name speaks for itself, I think.
Brands like these are just the start. Kohl's is also expanding its square footage dedicated to both athletic apparel and cosmetics - two growth segments. Really, the list of the retailer's impending updates goes on and on.
And analysts are taking notice.
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Cowen & Co.'s Oliver Chen said this on the matter:
"We are encouraged by Kohl's prudent strategies to win over a younger generation of shoppers by focusing on providing newness through products, partnerships, and experiences."
This all comes at an opportune time for the retail chain, as foot traffic has increased through its stores in recent months thanks to a partnership with Amazon.com Inc. (NASDAQ: AMZN). In July, Kohl's began accepting returns for the online retail giant. It packs up and ships the products back to Amazon, free of charge for consumers.
Some might think partnering with a main competitor could spell trouble - but it's done great things for the retailer. According to Glass, 80% of customers who come to Kohl's to return an Amazon package end up then shopping at the store. It's a win-win situation, and it showcases the upgrades to a whole new audience.
I like it, and I think you will, too - especially when you make this really easy move...
This Is the Easiest Trade to Make
What you want to do is buy a call option on KSS shares, expiring before the end of December. If you don't know what a call option is, it's really simple, and you can learn all about it right here...
The profits can be impressive, but that's really why we trade options. They produce big money, and fast. Take Crown Castle International Corp. (NYSE: CCI), for example. On Thursday, July 25, shares were trading around $129.20 - and the stock was poised to rise.
So, my readers bought a call option for just $1.85, or $185 for control over 100 shares. Then, just four days later, on July 29, shares had risen to $131.24. If you had bought the stock outright, you wouldn't have even made a measly 2% on the two-point gain.
My readers, however, sold their call options for $3.70, capturing a 100% gain in just four days. That's how powerful options can be. The bottom line is you have to be trading to maximize your wealth these days; buying and holding stocks is nice, but it won't get you all the way there.
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About the Author
Tom Gentile, options trading specialist for Money Map Press, is widely known as America's No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He's also a bestselling author of eight books and training courses.