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Here's How to Make a Killing Off Kohl's Extinction

Seriously, someone please tell Kevin Mansell – Kohl's Corp.'s (NYSE: KSS) triple-threat chairman, president, and chief executive officer – that he's wrong, wrong, wrong.

While the rest of the bricks-and-mortar retailers in America are shedding stores as fast as they can (though not fast enough for some of them to beat debt collectors to bankruptcy court), Kohl's triple-threat-to-the-company is actually adding new old-fashioned physical stores to the mid-tier retailer's lineup.

Are 1,154 stores in 49 states not enough?

Maybe Mansell is trying to pick up some of the stores Macy's is closing… as well as Target, Wal-Mart, and JCPenney.

Hey, Kevin, I've got Eddie Lampert on the phone. He says he's got a few hundred Sears and Kmart stores he's looking to unload before Sears Holdings Corp. (Nasdaq: SHLD) declares bankruptcy. How many do you want?

In a desperate gambit to heat up Kohl's sales in the retail ice age, to escape what I'm calling an extinction-level event, the company's lead sled dog is dragging the retailer straight off of a cliff.

Why is he doing this, and what's going to happen to Kohl's? And, my favorite question, how much can you make off of his chilling move?

Here's exactly what you need to know…

Kohl's Latest Big Mistakes

What's going on at Kohl's, besides a lot of delusion, is that sales are cratering at its physical stores.

Sure, the company beat its own knocked-down revenue projections for the fourth quarter of 2016. After guiding analysts' expectations down, such that the consensus for revenue was $6.0 billion, Kohl's trumpeted its beat in the fourth quarter. What was its revenue? A whopping $6.1 billion. Barely.

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The company wanted to impress anyone listening by saying its revenue was better than expected, thanks in part to progress in online sales.

They must have been good, because the so-called "beat" happened in spite of same-store sales declining 2.2% in Q4 (which, of course, included the all-important holiday shopping season).

But forget their beat. Revenue was actually down 2.8% versus a year ago.

And profits? "Ice cold" would be one way to describe the 15% tumble in quarterly profits. Again, might I remind you, that's during the holiday shopping season.

For the full year of 2016, Kohl's net fell almost 17.5%.

Yeah. Opening more stores is just what it needs.

Despite the cold wind blowing hard across the income statements and balance sheets of ALL America's bricks-and-mortar retailers, Kohl's is proud to announce the opening of nine new "small-format" stores, two "off/aisle" locations, and 12 "FILA" outlets.

"Sales results were weak for the quarter in total, driven by declines in brick-and-mortar traffic and offset somewhat by strength in online demand," Kevin Mansell said.

Gee, who would have ever figured that?

Kevin, pal, note to self: Kohl's same-store comps haven't been up much since 2010.

Of your more than 1,000 stores, 300 have between 35,000-55,000 square feet of space. Most of the rest have more than 80,000 to fill with the inventory that you're discounting more and more, while Macy's, JCPenney, Sears, Kmart, and the rest of your peers keep liquidating their inventory out of all the stores they're closing.

And if you think the Under Armour Inc. (NYSE: UAA) deal you made to become a leader in the "athleisure" space is going to drive traffic into your stores, think again. Athleisure, the market owned by Nike, Adidas, and Lululemon, isn't working out so well for them right now.

Oh, and Under Armour stock? I hope it's not a reflection of the prospects for your coveted deal with them because, Kevin, that would put your deal in the tank along with UAA's sales.

It's okay to be hopeful. I understand why you said, "In 2017, we will accelerate our focus on becoming the destination for active and wellness with the launch of Under Armour in early March."

Anything that warms your heart in the ice age is good for you. But it will be temporary.

How You'll Profit

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About the Author

Shah Gilani is the Event Trading Specialist for Money Map Press. He provides specific trading recommendations in Capital Wave Forecast, where he predicts gigantic "waves" of money forming and shows you how to play them for the biggest gains. In Zenith Trading Circle Shah reveals the worst companies in the markets - right from his coveted Bankruptcy Almanac - and how readers can trade them over and over again for huge gains. He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.

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  1. Charles i Riney | May 8, 2017

    E Commerce is going to kill all big box stores before 2020.

  2. Frustrated Shopper | May 8, 2017

    Kohl's is way overpriced for the stuff they sell. They are not upscale enough to sell merchandise at the those price points. They need to lower their prices. I rarely shop at Kohl's because of the fact that they are overpriced. The only time I do is when I either have a really good coupon, or I shop the 70-80% off clearance racks.

  3. dans | May 8, 2017

    E-commerce is a small part of the problem. The main problem they have is people are spending less on clothing and accessories and more on entertainment and technology. Ecommerce is only 8.4% of retail sales.

  4. Jignesh | May 9, 2017

    All you had to do instead of opening stores was to provide free shipping and returns

  5. Brad Flintman | May 9, 2017

    First off, this is my first time at this website, but oy what a large amount of snark directed at Kohls and the other retailers. You'd think one would have an interest in their well-being since collectively they employ a lot of people, and further shuttering of their stores will have a negative effect on connected industries like their landlords, utilities, and businesses set up near them like restaurants and other stores which would count on traffic from customers to dine and shop there after visiting there.
    I realize there's a strong contention that everything is going towards e-retailers, but honestly that is a wrong conclusion, for net stores have their limits: one just can't compare a picture and supposed sizing for an article of clothing and expect to get a good fit and style the same way as an actual store – not to mention returns and exchanges, which is more protracted and irritating a process online than visiting a store.
    Are there too many retailers offering the same or similar type clothing and accessories at jacked up prices all for the allure that a certain logo means better? Of course – but at the same time there's a reason certain items like socks and underwear are better buys at Wal-Mart or Target while a good sweatshirt is still better at Sports Authority or Sears, and horrendously overpriced at Saks or Macy's. In any case better common sense advising to these stores is needed rather than engaging in derision of their lower sales and how to gain from their loss, for that gain one makes today later will have to be contended with later when we get yet another depression.

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