The retail industry has been at the forefront of struggles since the COVID-19 pandemic.
Companies like Macy's (M) and Dollar Tree (DLTR) have announced the closures of hundreds of stores, while others like Bed Bath & Beyond have filed for bankruptcy. Many have tried to shift their strategies to adapt to a changing consumer market that has seen more of a shift to online shopping. Other Americans have struggled with their budgets due to inflation, and that has also had a huge effect on retailers.
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Kohl's (KSS) has been one of the retailers that has faced headwinds as the company's stock price has declined by over 60% since May 2021. So on Tuesday, Mar. 12, the company announced a new strategy, partnering with Babies R Us to bring baby items to around 200 stores nationwide.
The deal will see an expansion of Kohl's baby items beginning in August, and in the fall, it will also add an expansive list of items on the Kohl's website.
"We are partnering with Babies R Us to meaningfully expand our presence in the baby category, which is a compelling whitespace opportunity for Kohl's," Kohl's Corporation CEO Tom Kingsbury said during the company's Q4 2023 earnings call on Tuesday. "This partnership provides a significant growth opportunity in a large category that has been displaced in recent years and builds on our existing assortment while broadening our reach with younger customers."
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Kohl's is approaching the baby category the same way it approached the beauty category: viewing it as an underpenetrated growth opportunity. The strategy with Babies R Us is similar to the company's partnership with Sephora, which saw it introduce Sephora's presence into 910 stores in 2023. The company reflected on the success of the Sephora partnership during the call.
"We delivered more than $1.4 billion in sales, which was up more than 90% year on year and included greater than 25% comparable beauty sales growth in the shops opened in 2021 and 2022," Kingsbury said. "For Q4, Sephora sales increased more than 70% and comparable sales growth was nearly 25%, which was on top of a strong growth in the prior year."
Despite the move, the company still expects net sales for 2024 to stay within a mostly flat range versus last year. It announced a decline of 1.1% in sales during Q4 2023, a number that actually beat out expectations.
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