Hot Income Stock: Brand Evolution Is Key At Kohl's

F riday's employment report confirmed some economists' stance that the U.S. economy is headed for a soft patch. The jury's still out on that, but you wouldn't know it by looking at recent price action for department store operator Kohl's ( KSS )

 Its relative price strength has been impressive of late, seemingly immune to growing concerns about the underlying health of the economy.

The fourth quarter was a heavy promotional period for many retailers, but gross margin at Kohl's held its own, falling just 10 basis points to 33.9%. Operating margin expanded 30 basis points to 10.3%.Kohl's operates 1,164 stores in 49 states. Shares gapped up more than 6% on February 4 after the company announced preliminary fourth-quarter results. Later in the month, Kohl's reported profit of $1.83 a share, up 17% from a year ago. After five straight quarters of declining sales growth, sales rose 4% to just over $6.32 billion. Same-store sales rose 3.7%.

Brand evolution is important to many retailers, and it's no different at Kohl's. Its focus now is on the health and wellness market. With its partnerGaiam ( GAIA )

 a leading yoga, fitness and wellness company, Kohl's is launching an exclusive women's apparel collection later this month.

Fitbit fitness-tracker wristbands are flying off the shelves. The company has also been beefing up its health-and-wellness offerings in the home department with Omega juicers and Ninja food processors.

Kohl's is expecting the new focus to generate $1 billion in sales over the next three years.

It recently paid a quarterly dividend of 45 cents a share, giving it an annual yield of 2.3%. Its dividend growth rate is 13%, on par with recent quarterly dividend hikes of 15% and 11%.

Headed into Monday, Kohl's industry group -- Retail-Department Stores -- ranked in the top quartile of IBD's 197 group rankings based on six-month price performance

By Investor's Business Daily,
Source: http://www.nasdaq.com/article/hot-income-stock-brand-evolution-is-key-at-kohls-cm462532#ixzz3WcmrLqeC