Kohl's Corporation (KSS) is a U.S.-based department store chain that operates over 1,100 department stores in 49 states. The company sells moderately priced private-label and national brand clothing, shoes, accessories, cosmetics, and home furnishings. It also operates an e-commerce site with a more robust product selection and 12 Fila athletic apparel outlets.

The company has benefited from a strategic initiative that it launched last fall, where management wanted to increase sales and expand its operating margin. The plan focuses on four areas: driving sales growth, expanding its operating margin, implementing disciplined capital management, and undertaking an accountable and inclusive culture. 

KSS is looking to become the most trusted retailer of choice for activewear to drive revenue growth. The company is on track to grow its Active and Outdoor segment to 30% of its business. It is also working to reignite growth in its women's business and build a large beauty business. Its recent alliance with Sephora should help achieve the latter.

KSS launched Sephora on its digital platform in early August and is on track to open 200 Sephora at Kohl's stores this year. By 2023, the company expects to expand Sephora shops to at least 850 stores, with 400 locations by 2022.

It is also expanding through other alliances, such as its recent Eddie Bauer launch and the strengthening of its athleisure segment through the launch of FLX active apparel. The company has been strengthening its relationship with Amazon (AMZN) to help drive foot traffic. KSS has been benefiting from its Amazon returns program, where Kohl's stores accept free, unpackaged returns for customers of AMZN. The goal is to convert AMZN customers to KSS shoppers.

KSS is undertaking efforts to increase its omnichannel business, and so far, its investments are yielding strong results. Sales from its omnichannel business have more than doubled since 2014. Its stores play a significant role in the omnichannel experience as they fulfilled approximately 40% of its digital sales in the most recent quarter.

This was driven by its ship from store service in addition to customer pickup. The company has also made endeavors to boost its mobile traffic through its Kohl's app. KSS has also improved online offerings and expanded its e-commerce fulfillment centers. Other noteworthy efforts include Smart Cart, Your Price, and personalized search.

Plus, in its most recent quarter, management said that it is looking to pilot self-returns and self-pickup in certain stores this fall. Speaking of the most recent quarter, revenues came in at $4.4 billion, up 30.5% year over year. Sales were driven by growth in the company's store sales. Adjusted earnings were $2.48 per share, a massive increase from a loss of 25 cents reported in the prior year's quarter.

KSS also recorded the highest operating margin in ten years due to efficient pricing, promotional strategies, and tight expense management. The quarter's results led management to raise its fiscal 2021 view. Management said that it was seeing strength in back-to-school areas such as denim, active, and backpacks

KSS has an overall grade of B, translating into a Buy rating in our POWR Ratings system. The company has a Growth Grade of A as analysts forecast sales to rise 23.6% for the year, while earnings are expected to soar 358.5% this year. KSS also has a Value Grade of A, which isn't surprising with a trailing P/E of 11.23 and a forward P/E of 10.34.

We also provide Momentum, Stability, Sentiment, and Quality grades for KSS, which you can find here. KSS is ranked #11 in the A-rated Fashion & Luxury industry. For more top stocks in this highly rated industry, click here.

The company fares favorably to larger companies in this industry. For instance, Estee Lauder Cos. (EL) has an overall grade of C with a Growth Grade of C, and a Value Grade of D. If we look at growth, EL's growth projects are significantly lower than KSS. Plus, the stock is also overvalued with a forward P/E of 43.1.

Another company in the Fashion & Luxury industry is lululemon athletica (LULU) which is pretty popular. However, the company has an overall grade C, a Growth Grade of C, and a Value Grade of D. In fact, LULU is even more overvalued than EL, with a forward P/E of 59.52. 

KSS is just one of the stocks in my POWR Value portfolio. That's where I combine my many years of investing experience with the Top 10 Value Stocks strategy, which has +38.63% annual returns, to bring investors the best value stocks for today's market. 

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KSS shares were trading at $55.28 per share on Friday afternoon, down $0.09 (-0.16%). Year-to-date, KSS has gained 37.65%, versus a 20.00% rise in the benchmark S&P 500 index during the same period.

David Cohne has 20 years of experience as an investment analyst and writer. He is the Chief Value Strategist for StockNews.com and the editor of POWR Value newsletter. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers.

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