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Chasing Mr. and Mrs. Middle Market, J.C. Penney, Kohl's Open 85 New Stores (Wall Street Journal)

Summary: Aiming to boost their presence among middle-market shoppers, Kohl’s (KSS) and J.C. Penney (JCP) are both embarking on major expansions. This weekend Kohl’s is scheduled to open 65 new stores, the biggest store expansion in its history. Of the 20 stores J.C. Penney will open this weekend, 17 are free-standing; a departure for Penney whose stores have traditionally anchored suburban shopping malls. The 20 new stores represent Penney’s largest expansion in two decades. Kohl’s and Penney have both been reporting very strong same store sales increases, likely at the expense of both department store chains like Federated (FD) and discounters like Target (TGT) and Wal-Mart (WMT). Part of their success is due to strengthening their product lines with private label brands and exclusive lines from well known designers. Penney’s private label brands, like St. John’s Bay and Arizona Jeans account for over 40% of sales. Penney’s also has introduced exclusive lines from designers such as Liz Claiborne (LIZ), Nicole Miller and Steve Madden (SHOO). Kohl’s has focused on its Daisy Fuentes private label brand, an exclusive line from Vera Wang, and has even started selling Polo Ralph Lauren’s (RL) Chaps label. By 2010, Kohl’s and J.C. Penney are both planning to open 500 and 400 new stores, respectively.
Related links: Full articleWhere is the Retail Carnage Everyone Keeps Talking About?Kohl's Introduces New Store and Apparel DesignsRetail Beat: Merchandising is KeyStrong Month for Kohl's, Retailers, But Not Wal-MartApparel Labels Making Major Push Into RetailDiscount Retailer Operating Income Growth • Forbes: Kohl's Looks Good, J.C. Penney Looks Better • Conference Call Transcript: J.C. Penney Q2 2006
Potentially impacted stocks and ETFs: Costco (COST), Sears Holding (SHLD). ETF: Retail HOLDRs (RTH)

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Source: Kohls & Penney Go Head to Head With Expansion Plans