Kohl's CEO expects 10%-15% increases across all apparel categories this fall, says apparel inflation is 'clearly real'

NEW YORK , May 13, 2011 () – Kohl's Corp.'s first-quarter net income climbed 6 percent as the department store chain's move to control expenses and strong sales of store label products made up for a modest rise in overall revenue. The company also raised its full-year earnings outlook Thursday.

However, Kohl's, like many clothing stores, could face some resistance from shoppers as it pushes through price increases this fall. Kohl's has already done some testing of items to see how shoppers will react to price hikes. More testing will be done this summer to help determine the pricing strategy for the back-to-school season.

During a conference call with analysts, Kevin Mansell, chairman, CEO and president, talked about the inflationary pressures.

QUESTION: What's your strategy for dealing with price inflation in clothing?

ANSWER: We continue to closely monitor apparel inflation. Spring apparel product costs are often in the low single digits. We continue to expect significant increases across all apparel categories this fall, approximately 10 percent to 15 percent overall. We do have a few data points in denim, men's basics, and children's in the first quarter where out-the-door price increases in the high single digits resulted in unit declines in the low single digits with resulting sales dollar increases of mid-single digits. We have more widespread testing in place to run through June to give us time to react for the back-to-school season. Apparel inflation is clearly real, but we do believe we have had the time, the tools and processes to work through it effectively and as a result have a competitive advantage for both us and our consumer.

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