The retail apocalypse has claimed a new victim — and it could be great news for Kohl's

Bon-Ton Stores filed for bankruptcy
Analysts say this could create an opportunity for
Kohl's is already benefiting from its competitors' store closings and has reported stronger-than-expected sales numbers.

Some analysts think Kohl's could once again benefit from the struggles of a competitor.

The 100-year-old department-store chain Bon-Ton Stores filed for bankruptcy Sunday after announcing dozens of store closings last week. Bon-Ton Stores has 260 stores in the US, most of which are located in the Northeast and the Midwest.

Analysts believe that these store closings could present an opportunity for Kohl's, given the proximity of its stores. Of the 47 Bon-Ton stores scheduled to close by the end of April, 33 are within a 5-mile drive of a Kohl's location, the Jefferies analyst Randal Konik wrote in a note to investors on Monday.

Konik is advising investors to buy Kohl's stock.

"We believe the materialization of Bon-Ton's closures could be a cherry on top to accelerating fundamentals at Kohl's this year," he wrote.

While department-store chains across the US have announced store closings and reported weak sales, Kohl's has become somewhat of an industry anomaly.

It trumped its competitors Macy's and J.C. Penney with an impressive 6.9% surge in same-store sales during the holiday period of November and December. The other stores reported growth of 1% and 3.4% in the same period.

This has been attributed partly to an ability by Kohl's to capitalize on its competitors' misfortune.

"We estimate that for every Macy's store closed, 40% of the volume is transferred to Kohl's," Konik wrote.

Konik predicts that there could be a similar level of transfer from Bon-Ton Stores, given the product and demographic overlap.

Kohl's has largely been able to avoid the falling foot traffic at enclosed shopping malls, where only one in 10 of its stores are located.

"We believe Kohl's is a beneficiary of its off-mall physical store footprint, which is more convenient for customers to visit," Oliver Chen, an analyst at Cowen and Co., wrote in a note to investors in January.

Kohl's has also invested in changes designed to make its stores more relevant and appealing to shoppers.

Its new "smart basket" program, for example, gives customers discounts for picking up items in stores instead of shipping them to their homes, and it entered a partnership with Amazon in which it sells the online retailer's devices and offers free returns for products bought on Amazon products at some locations.

It has also reduced the size of stores to 35,000 square feet (about one-sixth the size of a Macy's store) to make them more efficient.