Kohl's 2011 Annual Report Download - page 5

We believe the transferability of the Kohl’s retailing strategy; our experience in acquiring and converting
pre-existing stores and in building new stores; and our substantial investment in management information
systems, centralized distribution and headquarters functions provide a solid foundation for our existing
operations and further expansion.
Distribution
We receive substantially all of our merchandise at our nine retail distribution centers. A small amount of our
merchandise is delivered directly to the stores by vendors or their distributors. The retail distribution centers,
which are strategically located through the United Sates, ship merchandise to each store by contract carrier
several times a week. We also operate fulfillment centers in Monroe, Ohio; San Bernardino, California; and
Edgewood, Maryland that service our E-Commerce business. We expect to open a fourth E-Commerce
fulfillment center in Texas in the summer of 2012.
See Item 2, “Properties,” for additional information about our distribution centers.
Employees
As of January 28, 2012, we employed approximately 142,000 associates, including approximately 30,000
full-time and 112,000 part-time associates. The number of associates varies during the year, peaking during the
back-to-school and holiday seasons. None of our associates are represented by a collective bargaining unit. We
believe our relations with our associates are very good.
Competition
The retail industry is highly competitive. Management considers style, quality and price to be the most
significant competitive factors in the industry. Merchandise mix, service and convenience are also key
competitive factors. Our primary competitors are traditional department stores, upscale mass merchandisers and
specialty stores. Our specific competitors vary from market to market.
Merchandise Vendors
We purchase merchandise from numerous domestic and foreign suppliers. We have Terms of Engagement
requirements which set forth the basic minimum requirements all business partners must meet in order to do
business with Kohl’s. Our Terms of Engagement include provisions regarding laws and regulations, employment
practices, ethical standards, environmental and legal requirements, communication, monitoring/compliance,
record keeping, subcontracting and corrective action. Our expectation is that all business partners will comply
with these Terms of Engagement and quickly remediate any deficiencies, if noted, in order to maintain our
business relationship.
Approximately 25% of the merchandise we sell is sourced through a third party purchasing agent. None of
our vendors individually accounted for more than 5% of our net purchases during 2011. We have no significant
long-term purchase commitments or arrangements with any of our suppliers, and believe that we are not
dependent on any one supplier. We believe we have good working relationships with our suppliers.
Seasonality
Our business, like that of most retailers, is subject to seasonal influences. The majority of our sales and
income are typically realized during the second half of each fiscal year. The back-to-school season extends from
August through September and represents approximately 15% of our annual sales. Approximately 30% of our
sales occur during the holiday season in the months of November and December. Because of the seasonality of
our business, results for any quarter are not necessarily indicative of the results that may be achieved for the
fiscal year. In addition, quarterly results of operations depend upon the timing and amount of revenues and costs
associated with the opening of new stores.
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