Kohl’s to Accept Returns From Amazon

I never thought I’d be saying this, but Kohl’s (NYSE: KSS) just might be the smartest brick-and-mortar retail stock in existence right now.

Much like the symbiotic relationship between a clownfish and a sea anemone – where the anemone provides safety while the fish feeds and cleans the anemone’s stingers – a similar relationship exists between Amazon and Kohl’s.

That’s right. Instead of fighting against Amazon and losing that battle alongside every other retailer, Kohl’s took a different approach…

Kohl’s teamed up with Amazon to offer the e-commerce giant something it didn’t have: a traditional in-store return process.

You see, right now, Kohl’s accepts returns from Amazon’s online purchases across every one of their 1,150 locations in 48 U.S. states. This could be the conduit that helps Amazon attract buyers who are still hesitant about buying something online simply because there are now more return options.

Instead of repackaging and mailing back an unwanted item, Amazon buyers can take it to a Kohl’s department store and initiate the return.

It’s a fantastic idea – one that benefits both parties.

Line Graph - Kohl's Daily

This new return policy introduces new customer foot traffic to Kohl’s. In fact, when it was announced that Kohl’s and Amazon were expanding their relationship, shares of Kohl’s shot up from around $67 to $76.

Since then, Kohl’s shares have drifted back lower.

I see this as an opportunity.

Action Plan: Just above the $66 level represents strong support for Kohl’s. A retest of this level could open the door for a great call play. But the story doesn’t end there. You see, some have even speculated that, if this arrangement works out, Amazon could buy Kohl’s outright. After all, Amazon currently has warrants to buy 1.7 million shares of Kohl’s stock at $69.68. And that, my friends, is something worth watching very closely.

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