Kohl’s Upgrades in Stores, Operations, and Merchandise Provide Hope Amid a Spate of Challenges

We assign a no-moat rating to Kohl's, which has had consistently declining sales over the past 10 years. We think its competitors, such as wide-moat Amazon and other online sellers, discount, and specialty retailers, will continue to siphon apparel sales from it and other department stores. Thus, while Kohl’s has responded to threats with increased e-commerce, improved merchandising, and an enhanced loyalty program, we project its operating margins in the midsingle digits in the long run, well below prepandemic levels.