Say hello to the new ... Kaldi?

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Say hello to the new ... Kaldi?

By Gina Acosta - 03/01/2018
Kohl's says adding Aldi to its stores allows the company "to achieve further inventory reductions and margin acceleration as a result."

Kohl's is bringing discount grocer Aldi into as many as 10 stores later this year as the retailer looks to keep its sales growth momentum going.

CEO Kevin Mansell announced the move in a call with investors after the retailer's fourth quarter earnings report. Mansell said the moves would allow the company "to achieve further inventory reductions and margin acceleration as a result."

At the start of this year, Mansell had told CNBC the company had re-adjusted the square footage of 300 stores over the past several years. He said the company had "a whole list of partners" ready to fill the leftover space. Kohl's is expected to eventually expand the Aldi presence to many of these 300 stores.

The Kohl's-Aldi partnership would seem to have two benefits: driving shopper traffic to Kohl's and helping Aldi accelerate its already-aggressive expansion plans across the U.S.

For the fourth quarter ended Feb. 3, Kohl's reported a 6.3% increase in same-store sales. The company's net income rose to $468 million, or $2.81 a share, compared with $252 million, or $1.44 per share, a year ago. Kohl's said new tax legislation boosted its profits by $136 million.

Excluding one-time items, Kohl's earned $1.99 a share, 22 cents ahead of analysts' expectations.

Revenue for the fourth quarter climbed 9.2 percent to $6.78 billion, while analysts were calling for sales of $6.74 billion.

Kohl's said more controlled inventory levels helped profit margins and boosted sales, as stores had a cleaner appearance overall.

Looking to fiscal 2018, Kohl's is calling for same-store sales to be flat to up 2 percent, while total revenue is expected be in the range of down 1 percent to up 1 percent. Earnings for the year should fall within a range of $4.95 to $5.45 a share, Kohl's said. Analysts had been calling for full-year earnings of roughly $4.72 a share.

“I am very pleased with our fourth quarter and full year results, which exceeded the high end of our most recent guidance by $0.11 per share. Over the course of the year, we saw consistent, sustained improvement in sales trends which culminated in a 6.3% increase in our fourth quarter comp sales. We improved our merchandise margins through strong inventory management and improved promotional and permanent markdowns. All areas effectively managed their expenses. And, we ended the year with 7% less inventory. I am very proud of our team and the role they played in these results and want to thank them for their hard work, loyalty and dedication,” Mansell said.

Kohl's ended the fiscal year with 1,158 Kohl's stores in 49 states. During 2017, the company opened four Kohl's stores, relocated one Kohl's store and opened one Off/Aisle location.