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Kohl’s to open in-store Babies”R”Us shops; back to black in Q4

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Rendering of Babies“R”Us shops inside Kohl’s (Photo: Business Wire).

Kohl’s is expanding its strategy to offer branded in-store shops.

The department store retailer, which launched a partnership to open hundreds of Sephora-branded shops in its stores in August 2021, is now entering a similar collaboration with WHP Global, the owner of Toys’R’Us and Babies’R’Us.  Plans call for the opening of approximately Babies’R’Us shops in 200  Kohl’s stores in fall 2024, with the first opening in August 2024. (WHP has a similar arrangement with Macy’s, which has opened Toys’R’Us shops across its stores nationwide,)

Kohl’s announced the news the same day it reported mixed results for its fourth quarter amid a challenging sales environment and weak full-year guidance.

The Babies“R”Us in-store shops at Kohl’s will range from 750 to 2,500 sq. ft. and sell baby gear, activity, bath, furniture, feeding and safety products. The dedicated space will be adjacent to Kohl’s existing assortment of baby apparel, which the retailer hopes will create a comprehensive baby shop for customers. The shops will also add new baby brands in addition to the existing brands Kohl’s currently offers in the category. 

According to Kohl’s, the partnership will introduce more new customers to Kohl’s, including younger customers who will be choosing Kohl’s for the first time.  Customers will also be able to shop an expanded assortment of baby products on Kohls.com and utilize a Babies“R”Us at Kohl’s registry to build and share gift lists.

Kohl’s Rewards members will earn rewards on every Babies“R”Us purchase both in-store and online, as well as earn and redeem Kohl’s Cash on all merchandise during designated Kohl’s Cash events throughout the year.

Kohl’s Q4

Kohl’s reported net income of $186 million, or $1.67 per share, for the quarter ended Feb.3, compared to a net loss of $273 million, or $2.49 per share, in the year-ago period.  

Revenue fell 1.1% to $5.71 billion, down from $5.775 billion last year. (The fourth quarter of 2023 included approximately $164 million from the 14th week.) Same-store sales were down 4.3%.

“2023 represented an important year for Kohl’s,” said CEO Tom Kingsbury in the earnings release. “We enhanced our store experience, expanded our partnership with Sephora, and invested in under-penetrated categories. We also simplified our value strategies and implemented new inventory management processes.”

 Kingsbury said Kohl’s partnership with Babies “R” Us will “meaningfully” expand its presence in the baby gear category, which he called a “compelling white space opportunity” for the company.

On the earnings call, Kingsbury said that Kohl’s ended 2023 with a Sephora presence in 910 of of its stores. The retailer plans to open approximately 140 smaller-format Sephora shops in 2024.

Kohl’s hopes to duplicate Sephora results

Kohl’s has had success with its Sephora in-store partnership. As of the end of 2023, the Sephora at Kohl’s fleet had reached more than 900 stores. The shops feature an curated assortment of top beauty products in makeup, skin and hair, and are located at the front of the store. 

The partnership drove a total beauty sales increase of nearly 90% year-over-year in the second quarter of 2023,  according to Kohl’s, and the assortment is not only resonating with existing customers, but is bringing in new customers that are shopping more frequently as well. 

 Meanwhile, Babies”R”Us in pursuing a variety of growth initiatives. WHP Global, parent company of Babies”R”Us and Toys”R”Us, s expanding its partnership with El Puerto de Liverpool in a move that will introduce the baby care products retailer to Mexico. 

The initiative will include the opening of dedicated Babies”R”Us stores, with the first to open in the second half of 2024, followed by the launch of a flagship website. Additional stores will follow.

In April 2023, WHP and Liverpool entered into a partnership to launch Toys”R”Us in Mexico.  The first store, which opened in October, has received an incredible response from customers, according to WHP. 

In July 2023, Babies”R”Us opened its first U.S. store under WHP, at American Dream, the massive 3 million sq.-ft.-plus entertainment and retail center in East Rutherford, N.J.

“Evolving our assortment and bringing more relevant product to the millions of customers we serve is a core focus as we continue to deliver on Kohl’s broader growth strategy,” said Tom Kingsbury, Kohl’s CEO. “We see significant opportunity in the baby gear category, and partnering with Babies“R”Us is another example of how we are finding new ways to optimize our assortment and further establish Kohl’s as the go-to brand for families.”

Based in Menomonee Falls, Wis. Kohl’s Corp. operates than 1,100 stores in 49 states as well as the Kohls.com e-commerce site and a consumer app. The Babies”R”Us brand can be found in more than 20 countries with digital sites and more than 100 branded and independent stores.

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