KSTHANE

Kohl's: The New Target?

It's not just Wal-Mart's value proposition that is hurting Target, it's Wal-Mart's new focus on apparel that is hurting Target. Wal-Mart has started merchandising up while Target has had to merchandise down (on price).

Suddenly the customers that used to shop at Target are walking into a newly remodeled Wal-Mart store that has beautiful, clean floors, no blue vested employees, a softer blue hue and more feminine signage and a completely revamped apparel assortment that actually comes from brands they've heard of....oh, and it's cheaper too. Wal-Mart has moved up the ladder while Target is trying to climb down it.

That doesn't mean Target isn't worthy of investment though. Their P-fresh stores concept really sounds like it can work and the company can get unit growth in smaller markets with them without sacrificing too much ROIC.

Kohl's has the same story it's had all along...they're not taking share from Target, they're taking it from mall based department stores like JCP and Sears.