Kohl’s Readies Store Rollout in Valley Spots

Kohl’s Readies Store Rollout in Valley Spots By SHELLY GARCIA Senior Reporter Kohl’s Corp. is moving ahead with plans to enter the Los Angeles area market despite the darkening retail landscape. The company has completed, or is close to completing, at least four deals, including several in the San Fernando Valley area, as part of a 30- to 35-store rollout planned for the spring of 2003. The Menomonee Falls, Wis.-based discount department store has deals pending in Moorpark and Simi Valley, along with other locations in Conejo Valley, Ventura and the South Bay, according to various real estate sources. Kohl’s several weeks ago paid $1.94 million to acquire 60 acres at the former Norton Air Force Base in San Bernardino for a 650,000-square-foot distribution center it will build to service its Southern California operation. Meanwhile, the company has signed a letter of intent for a build-to-suit lease at Moorpark Marketplace, a 300,000-square-foot shopping center proposed by Zelman Development Co., and it is in discussions with Selleck Properties for a site at Civic Center Plaza, a big-box retail center at Tapo Canyon Road and Alamo Street. “They have their prototype store, so my guess is they’re looking in new locations where they can get their prototype store,” said Ben Reiling, president of Zelman Development, which recently completed the Empire Center retail complex in Burbank. “So I think most (of the sites they are considering) are new locations.” Each Kohl’s store is laid out with individual departments like a department store, but unlike department stores, customers can use shopping carts and a central checkout for their purchases. The hybrid design dictates that the stores be built to suit the retailer. Zelman is under contract to acquire the property for Moorpark Marketplace and winding through the approval process. Target, Michaels, T.J. Maxx, Linens ‘n Things and Famous Footwear are also planned for the center, although, like Kohl’s, most deals are contingent on the project’s final approval. The Simi Valley center, on 17 acres, will be part of a mixed-use complex that will include 14 acres of townhomes and four and a half acres of senior housing, said Bob Selleck, whose company acquired the property about a year and a half ago. Selleck is seeking a general plan amendment to begin construction. The tenant mix, which Selleck describes as “well on the way to having committed,” includes Borders and a Ralphs Fresh Fare or Pavilions in addition to Kohl’s. A key issue for Kohl’s in that deal is the design of the shopping center. It sits directly across from Simi Valley’s civic center, making the design of the complex a key issue. Since Kohl’s will likely contract for a ground lease and assume the construction costs of the store, it will need to weigh the benefits of adhering to the design parameters that are set up. “Obviously, the architectural design criteria that’s adopted will have an impact on occupancy costs, so this is an important issue,” said Selleck, “to find something that satisfies the city and retailers. This proposal is such a focal point, the city wants to see something that’s of the highest quality possible.” Dave Fantle, a spokesman for Kohl’s, said it was premature to discuss the California opening. “We have announced we’re coming in 2003,” he said. “Until we get somewhat closer, these things are not confirmable.” Kohl’s has consistently followed a strategy of opening multiple locations in a market simultaneously, and is expected to do the same in the California market, despite the softening of retail sales. The retail landscape, lackluster for some months now, has grown increasingly foreboding since the terrorist attacks on Sept. 11. In November, sales increased by about 2 percent, retail’s weakest showing for the start of the holiday season since the early 1990s. But Kohl’s has defied the trend, posting a 25.9-percent gain for comparable stores in November, thanks to the successful niche it has carved offering a broad assortment of brand names at lower prices than competitors. The company, with sales of $6.1 billion in 2000, reported a net income gain of 44.2 percent last year to $372.2 million, Kohl’s fifth consecutive year of earnings growth above 30 percent. As a result, Kohl’s is moving ahead with its expansion plans while other retailers Gap Inc., Ann Taylor Stores Corp. and The Home Depot among them have scaled back. The company, with 382 stores, began in the Midwest and, most recently, has been expanding throughout the East Coast. Kohl’s plans to open about 70 stores in 2002, before moving into the California market in the following year. Kohl’s launch in L.A. is slated for March 2003.