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CNBC Exclusive: CNBC Transcript: Kohl’s Chairman & CEO Kevin Mansell Speaks with CNBC’s Courtney Reagan on “Squawk on the Street” Today

WHEN: Today, Tuesday, March 21st

WHERE: CNBC's "Squawk on the Street"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Kohl's Chairman and CEO Kevin Mansell and CNBC's Courtney Reagan on "Squawk on the Street" (M-F, 9AM-11AM ET) today, Tuesday, March 21st. Following is a link to the video on CNBC.com: http://video.cnbc.com/gallery/?video=3000603166.

All references must be sourced to CNBC.

COURTNEY REAGAN: WE ARE HERE AT SHOPTALK IN LAS VEAGAS SITTING DOWN WITH KOHL'S CEO KEVIN MANSELL. THIS IS YOUR FIRST TIME KEVIN ON CNBC

KEVIN MANSELL: YES I AM SO HAPPY TO BE HERE.

REAGAN: I AM SO HAPPY TO HAVE YOU. YOU'VE BEEN CEO SINCE 2008 SO THERE IS A LOT OF GROUND TO COVER BUT WE DON'T HAVE A TON OF TIME. I'LL START WITH THE BIG PICTURE, WITH STORES. KOHL'S HAS MORE THAN 400 MORE STORES THAN MACY'S. YOU'RE RESIZING, MAKING SOME SMALLER BUT NOT GOING THROUGH A MASSIVE STORE CLOSURE PROBLEM, DESPITE PRODUCTIVITY DROPPING OFF OVER THE LAST FIVE YEARS FAIRLY CONSISTENTLY. WHY IS THIS FLEET SIZE STILL RIGHT FOR YOU?

MANSELL: WELL I THINK WE'VE MADE THE DECISION THAT IN LOOKING AT OUR BUSINESS OUR BEST CHANCE FOR SUCCESS IN THE FUTURE REALLY IS AN OMNI CHANNEL RETAILER. AND WHAT THAT MEANS IS SORT OF MERGING CREATING OUR ONLINE BUSINESS AND OUR INSTORE BRICK AND MORTAR BUSINESS TOGETHER AND CREATING AN EXPERIENCE THAT'S SPECIAL FOR THE CUSTOMER. TO DO THAT FRANKLY I THINK WE NEED SCALE. WE HAVE TO BE CONVENIENT FOR PEOPLE. WE HAVE TO DO A BETTER JOB AT LEVERAGING THE STORES WE HAVE. BUT YOU'RE RIGHT, SALES IN STORES, AT KOHL'S AND OTHER RETAILERS HAVE COME DOWN. TO SOME EXTENT, WE HAVE TO ACKNOWLEDGE THAT FACT. AND RESIZE, AS YOU SAID IN SOME CASE, OPEN SMALLER STORES AND LEAN ON TECHNOLOGY A LOT TO MAKE THE EXPERIENCE BETTER.

REAGAN: DO YOU THINK THAT THE DEATH OF THE DEPARTMENT STORE HAS BEEN EXAGGERATED?

MANSELL: FOR SURE. DEPARTMENT STORES HAVE CERTAINLY EVOLVED OVER A LONG PERIOD OF TIME. I'VE BEEN IN THIS BUSINESS FOR A LONG TIME SO I'VE SEEN IT. YOU KNOW, FROM A POSITIONING PERSPECTIVE, OF COURSE KOHL'S IS NOT A MALL-BASED RETAILER. WE HAVE LESS THAN 80 STORES IN MALLS ACROSS THE COUNTRY. ALMOST 1100 IN STRIP CENTERS ARE FREE STANDING. WE'RE A LITTLE BIT OF A DIFFERENT KIND OF STORE. WE'RE MORE OF A DESTINATION FOR MOST OF OUR CUSTOMERS, FOR SURE. MALL TRAFFIC IS DOWN, NO QUESTION ABOUT IT. WE SEE IT. STORE TRAFFIC IS DOWN. YOU KNOW, OUR PERSPECTIVE IS WE HAVE TO WORK ON MAKING OUR STORES MORE PRODUCTIVE FOR SURE. USING TECHNOLOGY TO ENABLE ASSOCIATES TO DO THAT. THEN AT THE SAME TIME, MAKING THEM MORE ENGAGING. THEN TOGETHER, THOSE TWO THINGS, WE THINK WE CAN LEVERAGE OUR STORES MORE EFFECTIVELY.

REAGAN: YOU BROUGHT UNDER ARMOUR TO KOHL'S, A BIG DEAL. YOU'RE EXCITED ABOUT IT. THINK IT'LL ADD SOMEWHERE BETWEEN 75 TO 100 BASIS POINTS TO YOUR COMP WITHOUT CANNIBALIZING SOME OF THE OTHER BRANDS. HOW IS IT GOING SO FAR IN IS THAT WHAT YOU'RE SEEING?

MANSELL: ITS DEFINITELY BEEN GREAT. GREAT, NEW BRAND FOR US. VERY YOUNG CUSTOMER. PARTICULARLY WITH WOMEN AND CHILDREN IN A PARTICULAR WAY, IT'S BEEN AMAZING SUCCESS. ADDS TO OUR ACTIVE AND WELLNESS PORTFOLIO. SO ACTIVE AND WELLNESS IS A PLACE WE PUT A STAKE IN THE GROUND AND TRIED TO MAKE A STRONG POSITION IN THE MARKETPLACE. WE DO OVER $3.5 BILLION OF OUR BUSINESS IN WHAT WE CALL ACTIVE AND WELLNESS FOOTWEAR, APPAREL, HEALTHY LIVING, SLEEP HEALTHY EAT HEALTHY, AS WELL. BUT UNDER ARMOUR HAS BEEN AN AMAZING SUCCESS SO FAR.

REAGAN: WOW GREAT TO HEAR. TRAFFIC, YOU MENTIONED, HAS BEEN A TOUGH POINT FOR YOU. IT'S BEEN DOWN FOR SEVEN CONSECUTIVE QUARTERS. WOMEN'S ACCESSORIES AND APPAREL HAVE BEEN WEAK. THAT'S 40% OF THE MIX SO IT IS AN IMPORTANT PART OF YOUR BUSINESS. HAVE YOU SEEN TRAFFIC OR WOMEN TURN? YOU'RE 2/3 OF THE WAY THROUGH THE QUARTER.

MANSELL: THE KEY THING ON THE WOMEN'S APPAREL BUSINESS FOR US IS TO IMPROVE OUR SPEED. WE KNOW IF WE DON'T IMPROVE OUR SPEED, BY THAT, THE ENTIRE SUPPLY CHAIN, FROM THE DESIGN STANDPOINT TO THE SOURCING PERSPECTIVE TO THE LOGISTICS PIECE, WE HAVE TO GET FASTER. WE HAVE TO GET MORE NIMBLE BECAUSE WE'RE COMPETING AGAINST COMPANIES WHOSE SUPPLY CHAIN RIGHT NOW IS A LITTLE BETTER THAN OURS. SO I THINK FOR US, FROM A LONG-TERM STANDPOINT, THE REAL KEY TO SUCCESS WILL BE SHRINKING THE SUPPLY CHAIN, GETTING FASTER. THAT'LL GET THE WOMEN'S BUSINESS TURNED IN THE RIGHT DIRECTION.

REAGAN: SPEAKING OF THE SUPPLY CHAIN, IF THE BORDER ADJUSTMENT TAX GOES THROUGH, WHAT DOES IT MEAN FOR KOHL'S TAX RATE AND PROFITABILITY?

MANSELL: THE MOST IMPORTANT THING IS WHAT DOES IT MEAN FOR CONSUMERS? THE IMPACT ON OUR CUSTOMERS IS GOING TO BE MASSIVE. IT IS GOING TO BE A RAISE IN PRICES. FUNDAMENTALLY, HIGHER PRICES ON THE GOODS WE SELL ISN'T GOOD FOR AMERICAN CONSUMERS. YEAH, OF COURSE, IT IS GOING TO HAVE AN IMPACT ON OUR OWN P&L, AS WELL, AND IT'LL TAKE US TIME, I THINK, TO NAVIGATE THAT AND FIGURE OUT HOW TO MAKE THAT LESS IMPACTFUL. BUT REALLY, THE MOST IMPORTANT THING TO ME, IS WE'RE FOCUSED ON THE PRICE TO CUSTOMERS. IF PRICES ARE GOING TO GO HIGHER, I DON'T THINK IT IS A GOOD THING.

REAGAN: AND SO, WHAT KIND OF PRICE HIKES ARE WE TALKING ABOUT? 20%, 25%?

MANSELL: I THINK SO. I MEAN, IT IS CERTAINLY OPEN ENDED, WHAT THIS WILL LOOK LIKE. BUT CERTAINLY SOME OF THE PROPOSALS THAT ARE BEING MADE WOULD HAVE AN IMPACT LIKE THAT. AND WE'VE SEEN PRICE INCREASES IN OUR CATEGORIES BEFORE. WE'VE HAD AREAS OF TIME AND PERIODS OF TIME WHERE COTTON PRICES, FOR INSTANCE, SPIKED. AND WE'VE HAD TO PASS THOSE ON. AND THERE IS A DIRECT CORRELATION TO DEMAND WHEN THAT HAPPENS.

REAGAN: AND SO, TARGET SAID ITS TAX RATE WOULD GO TO 75%. JCPENNEY SAID 170%. WHAT DOES KOHL'S TAX RATE GO TO?

MANSELL: I THINK THE COMMON THREAD IS A LOT HIGHER. SO THE CALCULUS ON THAT, PROBABLY 75% TO 85% IS PROBABLY ABOUT RIGHT FOR US. BUT THE BIGGER ISSUE TO ME, FRANKLY, IS THE IMPACT ON PRICES FOR CUSTOMERS BECAUSE THAT'S WHAT DRIVES DEMAND. OVER TIME, I'M SURE WE'LL FIGURE WAYS TO NAVIGATE THROUGH HIGHER TAX RATES. IT IS A BAD THING FOR OUR P&L FOR SURE, BUT THE PRICING IMPACT FOR CUSTOMERS, TO ME, IS WHAT IS REALLY HARMFUL.

REAGAN: SO HERE AT THE SHOPTALK CONFERENCE, THERE'S A BUNCH OF DIFFERENT KIND OF COMPANIES THAT HAVE COME TOGETHER. TRADITIONAL RETAILERS – LIKE KOHL'S – ECOMMERCE PLAYERS, VENTURE CAPITAL AND EVERYBODY SEEMS TO BE PITCHING EVERYBODY ELSE. SO AS DEPARTMENT STORES ARE CONSOLIDATING, SOME CASES GETTING RID OF BRANDS, ARE YOU LOOKING TO BUY ANY NEW BRANDS OR BUY ANY OF THESE ECOMMERCE COMPANIES?

MANSELL: WELL, WE BELIEVE A LOT MORE, I WOULD SAY, ON THE TECHNOLOGY SIDE IN DEVELOPING OUR OWN TALENT AND OUR OWN SKILL SET. WE CERTAINLY USE OUTSIDE RESOURCES FOR SURE. FROM A PRODUCT PERSPECTIVE, WE THINK THERE IS AN AMAZING OPPORTUNITY FOR US, AS WE CONTINUE WITH THIS STORE STRUCTURE WE HAVE AND THIS MASSIVE FLEET OF OVER 1,100 STORES. AS OTHER COMPANIES HAVE TO MAKE DECISIONS TO CLOSE STORES AND BECOME SMALLER AND THEIR FOOTPRINT BECOMES LESS, I THINK WE HAVE AN OPPORTUNITY TO ATTRACT NEW BRANDS. AND SO THAT'S DEFINITELY A FOCUS OF OURS BECAUSE PART OF OUR STRATEGY, OF COURSE, IN IMPROVING THE EXPERIENCE AND GIVING A MORE ENGAGING EXPERIENCE TO CUSTOMERS IS ABOUT THE PRODUCT WE SELL. THAT IS THE NUMBER ONE THING. SO YOU KNOW, STRATEGIES LIKE UNDER ARMOUR, ARE A KEY PART OF THAT. I'M HOPING WITH OUR PATH TO SUCCESS, COMING THROUGH THE LEVERAGE OF OUR STORES, WE'LL BE A MORE ENVIABLE OPPORTUNITY FOR SUPPLIERS.

REAGAN: SOME SAY THAT DEPARTMENT STORES ARE LOSING THEIR CORE CUSTOMER AS THEY AGE. IS KOHL'S ABLE TO GAIN MATERIALLY MORE CUSTOMERS THAT YOU DIDN'T HAVE BEFORE, BECAUSE THEY'RE AGING INTO KOHL'S? OR IS THERE A LOST GENERATION FOR YOU?

MANSELL: NO. I THINK, I MEAN, KOHL'S HAS ALWAYS HAD SORT OF A BLUEPRINT THAT'S FOCUSED ON FAMILIES. THERE'S A BROAD ARRAY, OF COURSE. YOUNG FAMILIES COME INTO OUR CUSTOMER PORTFOLIO AS THEY HAVE CHILDREN OFTEN. THEY GO THROUGH IT. OBVIOUSLY, OUR CORE, KEY CUSTOMERS – THAT WOMAN IN THE 35 TO 55 YEAR OLD AGE RANGE – BECAUSE SHE USUALLY HAS A HOUSEHOLD, OFTEN HAS CHILDREN, SHE IS SPENDING MORE. AND SO SHE'S REALLY OUR TARGET FOR US FROM A SPENDING PERSPECTIVE. BUT THE MOVE OF CUSTOMERS THROUGH OUR STORE HAS ALWAYS BEEN PRETTY SIMILAR. THAT HASN'T CHANGED A WHOLE LOT.

REAGAN: JUST SORT OF TO WRAP IT UP HERE, AS YOU LOOK AT TECHNOLOGY, KOHL'S HAS AN APP AND YOU ALSO HAVE THIS OMNI CHANNEL IDEA. ARE YOUR CUSTOMERS CROSS SHOPPING? AND HOW DOES THAT IMPACT YOUR MARGIN?

MANSELL: YEAH. IT IS AMAZING, RIGHT? I MEAN, $3 BILLION OF OUR ALMOST $19 BILLION IN REVENUE COMES FROM ONLINE. BUT A LARGE PART OF THAT ACTUALLY OCCURS IN THE STORE. WE MIGHT SHIP FROM THE STORE AND LEVERAGE THE INVENTORY THERE. OUR CUSTOMERS MIGHT DECIDE TO PICK UP IN THE STORE. THERE'S SHOPPING IN BOTH PLACES. 15% OF OUR BUSINESS IS ONLINE GENERATED DEMAND. BUT 85% OF OUR BUSINESS STILL HAPPENS IN OUR STORES. OUR MOST PROFITABLE CUSTOMER, BY FAR, IS THE OMNI CHANNEL CUSTOMER. THE ONE THAT SHOPS BOTH IN STORE IS AND ONLINE.

REAGAN: THAT MAKES SENSE, WHY YOU'RE WRAPPING IT ALL UP TOGETHER.

MANSELL: RIGHT.

REAGAN: THANK YOU SO MUCH, KEVIN MANSELL, CEO OF KOHL'S. REALLY APPRECIATE YOU JOINING US. AND I HOPE YOU COME BACK SOON. DON'T BE A STRANGER.

MANSELL: ALRIGHT, WILL DO.

REAGAN: NOT ANOTHER NINE YEARS.

MANSELL: ALRIGHT, WILL DO. THANKS SO MUCH.

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