Kohl's Sees Royal Velvet Beyond Bath

Menomonee Falls, Wis.— Come next spring when it launches a Royal Velvet program for bath, Kohl's Corporation envisions opportunities to expand the brand to other home categories, the company said during its third quarter earnings call.

“Royal Velvet will initially sell in bath, but we feel it has the potential to expand elsewhere in home,” said Kevin Mansell, president.

The product development plan for Royal Velvet, which is licensed to global sourcing group Li & Fung USA, has always included plans for expanding the brand beyond bed and bath.

Along with the Chaps brand, which will represent Kohl's largest men's brand program, the Royal Velvet brand is shipping in mid January for launch in the spring.

Royal Velvet represents one major initiative that is hoped to give the home category a boost, which has logged a lackluster performance lately. During the third quarter, Mansell said home was “not as strong in sales as women's. We probably didn't have as many new initiatives (in home) as we did in women's.”

He added that, overall, the gifts and housewares businesses have been “good” but decorative accessories and textiles were “a little weaker” during the period.

Leading the company during the quarter were the missy, juniors and women's accessories businesses in non-clearance selling, proving that customers are responding to Kohl's newest initiatives in these categories, Mansell said. These include the rollout of Daisy Fuentes-branded sportswear and sleepwear, the introduction of the company's apt. 9 private label men's and women's sportswear brand, updates in successful existing lines and the launch of the beauty business in 288 stores.

The quarter's inventory management saw levels on an average store basis decrease by 7 percent per store.

“Although this is higher than our previous forecast of down low teens, we accelerated some of our receipts for high trending businesses and some of our imports to ensure we didn't miss sales opportunities in the fourth quarter,” Mansell explained. “I'm very comfortable with the freshness and content of our inventory for the holidays.”

He added that throughout this holiday selling season, new products will continually roll out, aiding the store's focus on achieving a “smooth transition out of holiday as a result.”

Already, Kohl's has begun improvements this quarter on in-store presentations, reducing the number of tables and tower programs versus last year.

And in time for the springtime introduction of Royal Velvet and Chaps, the store will have added improvements, Mansell said, “both on a fixture basis and a visual basis. There is more coming.” Details will be released at the end of the first quarter.

New marketing initiatives supporting the holiday selling season are under way, but the company declined to provide details.

New store openings during the third quarter totaled 48 — seven in August and 41 in October. It entered the San Francisco market with 11 stores; Salt Lake City with five stores; Rochester, N.Y., with three stores; Portland, Maine, with two stores; Reno, Nev., with two stores; and Montgomery, Ala., with one store.

In 2005, the plan is to open approximately 95 stores, which would increase square footage by 15 percent. Of these units, 33 are set to open during the first quarter. Also, the company will enter the Florida next fall market, with the biggest cities being Orlando and Jacksonville.

In addition, Kohl's added nine stores in the Midwest region, six stores in the Northeast region, five stores in the Southwest region, three stores in the South Central region and one store in the Southeast region.