Kohl’s brings Babies R Us back to drum up more sales

WOODLAND PARK, N.J. — Kohl’s is thinking small to rev up its sales.

The retailer is opening Babies R Us shops in its existing stores across the country starting this week, and plans to have 200 by the end of September. The shops will carry a variety of baby merchandise that the company has not offered before, including shampoo, strollers and car seats. Kohl’s previously sold only baby clothing.

With the move, the Wisconsin-based retailer aims to cater more to young families, whether they are decorating their homes, getting ready for back-to-school or preparing for a new addition. Most of the retailer’s approximately 1,170 stores are in strip malls in the suburbs, a short drive for busy parents who are running errands or shopping for groceries.

Along with the baby category, Kohl’s is also bulking up its assortment of home decor, gifting and impulse items. CEO Tom Kingsbury estimated in late May that those expanded categories, including Babies R Us, are “a $2 billion-plus sales opportunity” in the coming years.

Yet, U.S. demographics aren’t tipped in Kohl’s favor. Births in the U.S. totaled 3.59 million last year, according to provisional data from the U.S. National Center for Health Statistics. That is the lowest number of births in more than 40 years.

On a store tour in New Jersey on Wednesday, Chief Merchandising Officer Nick Jones showed off the first Babies R Us shop. Customers who walk through the location can see and feel many pricier items, such as strollers, cribs and high chairs, outside of the cardboard box. The shops include many prominent baby brands, including Hatch, Frida, Graco and BabyBjorn.

Over the past few weeks, online shoppers have also seen Babies R Us on Kohl’s website. Its website has twice as much merchandise as the approximately 800 to 1,000 items available in most shops, the company said. Kohl’s will also launch a baby registry in the fall.

Each shop will range in size, but will be set up next to the baby and kid’s clothing that is currently in all stores. Jones said more merchandise is on the way for expecting families, too, including baby apparel from Nike. It is introducing maternity clothing from Motherhood, a direct-to-consumer brand, which will be exclusive to Kohl’s stores.

The retailer is rolling out Babies R Us shops at a time when it needs growth drivers. Kohl’s net sales totaled $16.6 billion in the most recent fiscal year, which ended in early February. That is a nearly 14% drop from five years ago.

Kohl’s expects current full-year net sales to decline between 2% and 4%. It posted a surprise net loss of $27 million for the fiscal first quarter and lowered its full-year forecast in late May.

Kohl’s shares are down 24% this year, trailing the S&P 500’s nearly 16% gains during the same period.

Similar to other retailers, Kohl’s…