If You Shop at Kohl's, Prepare for These Major Changes

A new merger may affect plans the department store has in place.

Department stores were some of those hit hardest by the COVID-19 pandemic, when stay-at-home orders forced many of us to switch to online shopping. Kohl's is one of the retailers still working hard to bounce back, which has prompted the company to set new plans in motion in recent months. While Kohl's is working to make internal improvements, other forces are at play, and that could affect your shopping experience down the line. Read on to learn more about changes that could be coming to your local department store.

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Kohl's may be purchased by a major competitor.

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Shoppers will be interested to learn that two longstanding competitors could be joining forces. As reported by The New York Post, a source said the owners of JCPenney—Simon Property and Brookfield Asset Management—have made an offer to purchase Kohl's for nearly $8.6 billion. If purchased, you can expect changes in the way Kohl's is run.

The announcement comes two years after JCPenney was bought out for $1 billion by Simon and Brookfield in 2020, following the department store's bankruptcy filing. As a result of the pandemic, JCPenney was left with just 689 stores, down from nearly 1,110 stores in 2012.

News of the acquisition was beneficial for Kohl's shares, which saw a 5.3 percent bump to $60.39 on April 25, increasing from Friday's close of $57.36. Simon and Brookfield have allegedly offered $68 a share, The New York Post source said, even though Kohl's stock has not traded above $65 in almost three years, according to Bloomberg.

If the deal goes through, it may foil plans Kohl's announced earlier this year.

Kohls retail store interior during the holidays
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In Feb. 2022, Kohl's revealed plans to add Sephora shops to 400 of its stores, as reported by USA Today, replacing the current in-store beauty department. After partnering in 2021, the two companies opened 200 of these small beauty shops in Kohl's stores that same year.

If you were looking forward to this addition at your local Kohl's store, you may be disappointed to learn JCPenney's acquisition could thwart this plan. According to The New York Post, a source said if the deal goes through, Kohl's will nix plans for the Sephora concession stands. It was not reported why Sephora shops would no longer be in the mix, nor was it clear what would happen to the existing shops.

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The purchase will "streamline operations" for both brands.

blouses and shirts at Kohl's store
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A source reportedly told The New York Post that through the acquisition, operations will be streamlined for both Kohl's and JCPenney, and costs will be cut by nearly $1 billion over the next three years.

However, the source said that the new "corporate parents" will maintain the two separate brands, and Simon and Brookfield will employ a single management team to operate both JCPenney and Kohl's at the start of the merger. All private apparel will also be manufactured by the same in-house label, according to the source.

There have been talks of Kohl's selling itself for several months.

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Kohl's has been dealing with ongoing pressure in 2022. Investors, namely Macellum Advisors (which has a 5.4 percent stake in the company), pushed the department store to put itself up for sale earlier this year. Amid the continued call for a sale, Macellum attempted to take control of Kohl's board, Reuters reported, accusing the board of "putting its thumb on the scale to keep Kohl's mired in operational mediocrity."

As reported by The New York Times in February, Kohl's had hired PJT Partners and Goldman Sachs "to field any further interest" about the sale, after rejecting takeover approaches for coming in too low. In March 2022, Kohl's said that Goldman had been in talks with over 20 prospective buyers, Reuters reported.

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