Image Courtesy of Kohl’s
September 2, 2025
Will Private Label Lead a Kohl’s Turnaround?
Kohl’s Inc. said strength across its private labels helped drive better-than-expected second-quarter results and remains key to its recovery efforts as it prioritizes showing value to consumers.
“We know that we have a powerful set of proprietary brands that build customer trust and loyalty,” said Michael Bender, Kohl’s interim CEO, on an analyst call. “In addition, customers who buy our proprietary brands spend more of their wallet with Kohl’s. These proprietary brands play an instrumental role in our value proposition. They allow us to offer quality products at a lower opening price point, which highly resonates with our core loyal customers.”
Kohl’s Private Label Shows Relative Strength
Helped by internal efforts to elevated proprietary brands, Kohl’s private label comps were down 3% in the second quarter, but improved 500 basis points sequentially and outperformed the overall 4.2% decline. Net sales topped expectations due to improved online and proprietary brand sales, both of which performed positively in July.
This private label outperformance was driven by strength by Tech Gear, Simply Vera Vera Wang, Lauren Conrad, and Flex. Three recently-launched home brands — Mariana, Hotelier and Mingle and Co. — saw a “strong initial response” and contributed to improved performance in bedding, bath and tabletop categories. This fall, the Flex brand will be expanded to kids.
Bender said, “We believe there is a substantial opportunity for us to lean into our value oriented proprietary brands to offer more relevance and quality at an affordable price point to our customers.”
Value Proposition Still on Consumers’ Minds
Another move being made to emphasize value is making a larger range of national brands eligible for coupons as excluding certain brands “created friction with our customer base as we were not providing the value they were looking for, especially with our loyal customer,” said Bender.
Bender noted that the push to emphasize value comes as Kohl’s lower- to middle-income customers are trading down to lower opening price point products.
Other steps to revive sales, which have declined three years in a row, include reinvesting in women, petites, and jewelry as past efforts to reach new consumers “led to unintentional displacement of products and categories that were important to our most loyal customers,” said Bender. Kohl’s is continuing to invest in Sephora, which is bringing in younger consumers, and impulse departments near cash registers.
To improve the in-store shopping experience, Kohl’s is also reestablishing a dedicated accessories pad, relocating juniors across from Sephora, moving active back to the men’s and women’s departments, and buying narrower and deeper in basics to reduce out-of-stocks. Bender said, “We know we currently have an inconsistent in store experience without a unifying point of view of what we want the customer to feel when they walk in the store.”
Shares of Kohl’s rose 24% to $16.17 on the day second-quarter results were reported due to the quarter’s beat and raised outlook, but shares had been as high as $64.40 in 2021. Bender cautioned to analysts, “While it’s clear that these efforts are beginning to resonate with our customers, we also recognize that this performance is not yet where we aim to be.”
Discussion Questions
Will driving more appeal around private labels be more important than emphasizing its national brand proposition in Kohl’s recovery efforts?
What else besides emphasizing value does Kohl’s need to particularly work on?
Poll
Loading …BrainTrust
Dick Seesel
Principal, Retailing In Focus LLC
Anil Patel
Founder & CEO, HotWax Commerce
Jeff Sward
Founding Partner, Merchandising Metrics
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Last week’s results created chatter that Kohl’s was turning itself around. The numbers do not back that narrative. Sales declined by 5.1% – the fourth year of declining revenue. Since 2019, Kohl’s Q2 sales are down by 19.7%. Over that same period, overall spending on the products Kohl’s sells has risen by about 30.3%. In other words, the market share loss is huge. The profit spike was caused by a one-time litigation settlement and had nothing to do with operational improvements. Without this gain, net income would be down by 63.6% for the quarter; and for the half year, Kohl’s would have made a miserly profit of just $10 million. This is not a firm that is recovering. This is a firm that is still stuck in the mire of decline.
And on private label … generally speaking, the strategy is sensible: it helps differentiate, it boosts margins, and it proves a strong value position. However, the development of more own brands needs to be part of a holistic strategy. Take the new kitchen and dining brand, Mingle & Co: it’s nicely designed and has some reasonable price points. However, in many stores it looks atrocious: merchandised badly, massive gaps on shelves, no impact or authority. The same applies to apparel where, in too many Kohl’s stores, customers are met with an endless sea of merchandise rather than distinct brands. Once again, it all points to the fact that Kohl’s needs a huge overhaul.
And really, how much does private label mean to the consumer when the sales floor is a mess?
As a long time Kohl’s shopper the things that used to bring me to the store like diversity of labels, (many of my favorite brands are no longer sold) and great deals (most premium brands are no longer Kohls cash eligible or discount eligible) are not strong enough offers when I can get these options at other Retailers. A couple times a year I’ll go in to grab a few Sonoma t-shirts for a great low price quality shirt and may find an errant gem. Adding new propriety brands may push out the few remaining non Kohls brands.
Private labels are certainly part of the recovery strategy, but focusing on private brands alone won’t be enough. National brands are still an important part of Kohl’s mix, notwithstanding the fact that the national brands are being outperformed by their private labels. Kohl’s needs to give shoppers a reason to visit their stores — price points and brands can help, but once lost, shoppers are hard to re-engage if there’s no compelling reason to do so. Refocusing on the basics of the store experience in order to maximize in-store conversion rates to make the most of every shopper that visits would be a good step forward.
A trip to the wayback machine, courtesy of my own experience at Kohl’s (1982-2006). Kohl’s grew its nationwide footprint and its market share by adding mid-priced national brands, rather than a core of private brands like Sonoma. Over time, there was a proliferation of private and proprietary labels that took share away from those national brands but did little to help the company’s sales or assortments. For many stores, not just Kohl’s, it was also a margin play — but the margins only work if the goods sell.
Today, the question isn’t whether Kohl’s should sell more or fewer national brands — although some categories like intimates and athletic shoes depend on those brands — but whether they are offering “clarity of offer” within given departments. Looking at bath towels as an example: Does Kohl’s need to add Miryana and Hotelier private brands, on top of Simply Vera and Sonoma? Is the brand position of each label clear, or is the end result duplication of assortment and lack of inventory depth?
Costco ought to be a lesson to every other retailer. They sell just one private brand — Kirkland — and its reputation for quality has done great things for the company’s credibility over 30 years.
Yes! Costco turned that singular private label into a trust signal that reinforces the store brand.
“…trust signal…” Borrowing that!
Great point about “clarity of offer”. I talk about this as “internal competition”. Brand by brand (national or proprietary), sku by sku, is there a clear ‘reason for being’…??? Is duplication and redundancy truly minimized? If there are similar items at different price points, is the quality difference, and therefore the price difference, obvious? And I mean obvious to the customer, not the buyer who knows the product at the molecular level. Assortment planning is harder than it first looks. The nuances of different product offerings have to be obvious to the customer. The buyers opinion about different isn’t enough.
And how does the customer learn differentiation of quality/price?
IN store preferably. (But traffic volume is not Kohl’s forte)
Alternatively: digitally with reviews or search.
Search is now AI (Google doing it to itself, plus the industry).
Here is example, most likely trained on Kohls press statements. At some point, reviews may counter (or affirm) purported differences! Does the jargon of “elevated” mean something to customers?
AI result:
Positioning
FLX: Fills a “white space” in Kohl’s private brand portfolio for elevated, premium athleisure.
Includes high-quality performance fabrics, functional details like hidden pockets, and often has a focus on sustainable materials.
Tek Gear: Complements FLX and national active brands like Nike and Adidas by offering an affordable, entry-level activewear option.
Offers basic performance features like moisture-wicking fabric and generally durable construction, though the materials may be less advanced.
[Inclusion of Nike & Adidas would not be better in FLX definition?]
Vs. Kohls.com site
At 3 second glance, there is no call out to sustainable.
[images shown are lifestyle/athleisure vs “performance”]
“Life’s a workout. Flex with it.FLX apparel is softness that plays hard, featuring high-qualityfabrics, premium features and styles as versatile as you.”
Vs. a product page wording of FLX brand:
“Elevate your active wardrobe with this stylish and versatile skort from FLX. The pleated design offers a flattering fit while allowing for effortless movement, making it perfect for everything from weekend outings to casual days at the park.”
The “premium” messaging will flatline without tangible proof.
Is consumer hearing interchangeable words?
Ultimately it depends a lot upon the quality of the brands, or, to be more precise, the quality offered for the price; but private label is no panacea….a whole catalogue of knock-off names hasn’t obviously saved macy*s.
Focusing on private labels can offer Kohl’s higher profit margins and increased control over product quality and supply chains. Additionally, cultivating unique and exclusive offerings can help differentiate the store from competitors, potentially attracting a loyal customer base. Emphasizing private labels could also allow Kohl’s to respond more swiftly to changing consumer trends and preferences.
However, private label programs and strategies all differ from one another in terms of quality, types, and objectives. Generally speaking, private label is different than store branding. No one does store-branding than Trader Joe’s, which itself is thought of as a brand, and a quality one at that. In the good ole days, Sears made “real brands” out of Kenmore, and other labels throughout the store. J.C. Penney did the same, even if not as well.
But they key here is that Kohls needs to treat and develop private label as exclusive brands. If all they do is make private label strictly about pricing, or if the products have Kohls’s name and a low-price tag, the program will fail, because someone is always out there to provide equal or better value, at a cheaper price, and whereas Kohl’s is a well-known name, it carries no prestige, and in fact, somewhat the opposite.
Earlier in my career I was deeply involved in the private label industry and played a huge role in the transformation of pure “knockoff’s” to exclusive-branding. I recall telling the CEO of Kmart that no one wants to brush their teeth with “Kmart” and no one wants to go out on a dinner date with “Kmart” clothes. We ended up branding each category in the store and business improved. There was a day when Kmart was successful. The same scenario was true for many other retail chains.
Private brands are not a panacea and can, in fact, become a liability if not carefully managed (see JC Penney). Renderings of perfectly merchandised, fully stocked sections punctuated by branded signage can create a lot of excitement at retailer HQ. Unfortunately, in-store execution doesn’t always live up to that promise. Hopefully, Kohl’s will resist the temptation to churn out more brands and instead, ensure that its current stable is differentiated, cohesive, and value-oriented. I like the adjacency changes Kohl’s is implementing, particularly leveraging proximity to Sephora shops to showcase accessories. As annoying as the impulse-gauntlet-at-checkout craze is getting from a customer experience standpoint, I can understand why Kohl’s would jump on that bandwagon.
JC Penney immediately came to mind. A very reminiscent journey.
Kohl’s appears to confuse brand building with margin optimization. The company is treating private label as a margin optimization exercise but expecting a brand-building performance. Kohl’s is proliferating brands (Mariana, Hotelier, Mingle & Co.) like JCPenney did before its collapse. This scattershot approach dilutes brand equity instead of building it. How Successful private label demands deep category expertise, supply chain control, and quality consistency. Kohl’s is still struggling with basic merchandising execution. You can’t build brand trust when your fundamental retail operations are inconsistent. Kohl’s needs to fix its retail execution before it can flex any private label muscles. Fix that and then focus on building 1-3 exceptional private brands that solve real customer problems. Build the brand, and the margins will come, not vice versa.
Distinction and differentiation will lead Kohl’s journey back to relevance. Private label has as much downside as it does upside. It has to be proprietary brand development that leads the way. Proprietary brands, not private label. OK…so I’m splitting hairs. But brand development is a whole different level of merchandising than private label. Private label began life as a fairly lazy process of knocking off best sellers in a quest for margin. The hard work had been done by the brands and the retailers just stepped in and copied the idea. Proprietary brand development will still learn from what the market has to teach, but developing a free standing full fledged brand is a lot harder putting a private label on a couple of best sellers. And maintaining that brand for a sustained period is not for the weak at heart. Kohl’s has had private labels for some time now. What level of distinction and differentiation have they accrued for themselves? Right…none…zero. Let’s not oversimplify the work that lays ahead for Kohl’s. The right mix of the best national brands and great execution on proprietary brands is what gave Target their lift. And then Target proved how difficult that is to execute over the long haul (along with all the other moving parts in the retail dynamic).
It really doesn’t matter whether it’s private label or branded merchandise. If we are talking about turning around for Kohl’s, it is a very short conversation.
Private labels give Kohl’s a solid foundation. They drive margin, create value for customers, and help the brand differentiate. But no amount of private label growth will change the bigger issue if stores remain cluttered and inconsistent.
The challenge is execution. Customers want a clean, organized store where products are presented with intention and impact. If Kohl’s can deliver that experience, private labels will strengthen the brand story. If not, even the strongest labels risk fading into the background.
Private labels give stores a way to offer something shoppers can’t get anywhere else, as long as the quality and value deliver. Done right, they build loyalty and strengthen reputation. Offering national brands will still matter, especially as private labels gain recognition, but a strong in-house brand could become a key reason shoppers choose Kohl’s.
In broad strokes. But I’m not convinced Kohl’s has a level of FOMO or can’t get anywhere else. (anywhere = www).
For the 20th anniv of the licensing, maybe Kohl’s will do something in 2026 with Simply Vera Vera Wang. But special events or merchandise drops work best on a solidly based retail brand. (e.g. Target in better years).