Kohl's is defying the retail meltdown - and it's more proof that malls are dying
- Kohl's same-store sales surged 6.9% in the holiday period.
- The growth suggests that Kohl's is scooping up market share from the rash of stores that are closing across the country, most of which are tied to shopping malls.
- Nine out of 10 Kohl's stores are located in suburban strip malls and other areas away from enclosed shopping malls.
Kohl's is defying the retail apocalypse.
The retailer's same-store sales surged 6.9% in the critical holiday period, due in part to stronger shopper traffic to its stores, the company said Monday.
The growth at Kohl's trounced gains made by rival department stores Macy's and JCPenney, which saw holiday same-store sales growth of 1% and 3.4%, respectively.
The results suggest that Kohl's is scooping up market share from the rash of stores that are closing across the country, most of which are tied to shopping malls.
Macy's, JCPenney, and Sears are among dozens of mall-based retailers that have closed thousands of stores over the last couple of years amid massive declines in foot traffic to shopping malls. At least another 3,000 stores are expected to close this year.
Kohl's will continue to benefit from the closures, according to a recent analysis by Gordon Haskett Research. Kohl's has the highest number of locations within a five-mile radius of the 103 Sears and Kmart stores that are closing in April, the analysis found.
Kohl's has managed to turn business around without closing a ton of stores because it's somewhat immune to the massive drop-off in mall traffic.
Nine out of 10 Kohl's stores are located in suburban strip malls and other areas away from enclosed shopping malls. The company has about 1,100 stores across the US.
"We believe Kohl's is a beneficiary of its off-mall physical store footprint which is more convenient for customers to visit," Cowen and Co. analyst Oliver Chen wrote in a note to clients on Monday.
Instead of closing stores, Kohl's has been shrinking them - opening smaller stores that are about 35,000 square feet (about one sixth the size of a Macy's store) - and investing in its existing locations.
The company says it has been improving inventory management as it brings in more national brands like Under Armour.
Kohl's has also rolled out online initiatives that benefit stores, like "smart basket," which gives customers discounts for picking up items in stores instead of shipping them to their homes.
And the company recently partnered with Amazon to sell the e-commerce company's devices in stores and offer free returns for Amazon products at several of its locations.
Amazon could be eyeing Kohl's as an acquisition target
Some retail industry experts predict that Amazon could acquire Kohl's this year, as the company looks to grow its presence in the physical retail world to better compete with rivals, like Walmart, that have thousands of US stores.
Kohl's single-story locations away from malls are likely more attractive to Amazon than the multi-story buildings occupied by department stores like Macy's and JCPenney, Steve Dennis, a former executive at Neiman Marcus and Sears and the founder of retail advisory firm SageBerry Consulting, told Business Insider.
"I keep saying Amazon should buy Kohl's," Jan Kniffen, a retail consultant and former retail executive, told CNBC's "Squawk Box" in November.
"It's a very simple reason," Kniffen said. "It [would give Amazon] a nice little halo."