Kohl's Expands Amazon Return Program, and Shares Respond With 9% Jump Early Tuesday

Daniel Miller, The Motley Fool

What happened

Shares of Kohl's Corporation (NYSE: KSS), a leading omnichannel retailer with over 1,150 stores in 48 states, popped as much as 9% higher Tuesday morning after the company announced all Kohl's stores will be accepting unpackaged returns for Amazon (NASDAQ: AMZN) customers starting in July -- but is this a good move or a bad sign?

So what

Kohl's accepting unpackaged Amazon products has been in development since 2017, when the two companies started the return product pilot with 100 stores in Los Angeles, Chicago, and Milwaukee. After ample testing, both agreed to roll the program to all Kohl's stores and will enable stores to accept eligible Amazon items, even those without a box or label, for free.

Amazon desk inside a Kohl's store.

Image source: Kohl's.

"Amazon and Kohl's have a shared passion in providing outstanding customer service, and this unique partnership combines Kohl's strong nationwide store footprint and omnichannel capabilities with Amazon's reach and customer loyalty," said Michelle Gass, Kohl's chief executive officer, in a press release.

Now what

The announcement sent Kohl's shares up 9% early Tuesday morning, but not everybody is convinced it's a brilliant move. This could be seen as an act of desperation from a retailer that has witnessed increasing competition from nearly all angles, including e-commerce from the likes of companies such as Amazon. However, what investors should consider is that the program is an innovative way to drive traffic to Kohl's stores. We'll have to wait and see if the additional foot traffic can draw out incremental sales dollars and value from consumers that might not be in the store otherwise, but the new system at least gives the retailer an opportunity for such growth with little downside. 

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel Miller has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.