Tuesday, September 29, 2009

Kohl's Opening 37 stores tomorrow - Mervyn's death yields Kohl's expansion

In 2003 Kohl's - based out of Wisconsin - opened 28 stores in California. A market that any retailer would want to be in. This was made possible by the bankruptcy of KMart. Kohl's bought the leases through the bankruptcy court at a discount and in bulk. Late last year, Kohl's successfully bid on 30+ leases that Mervyn's had at that bankruptcy auction. Now, tomorrow, Kohl's is having a mass grand opening expansion of 37 stores - most in California. This is a good sign that there are still good fundamentals in retail amidst all the retail store closures recently. If you can buy a discounted lease and have decent retail sales of mass market appealing wares, you can be profitable. Kohl's further steps in to the battle with market segment leader Target - who had owned Mervyn's until 2004 when it sold to a private equity partnership. Smart move Target! And perhaps a better move for Kohl's - we shall see...

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