In retail, it is always paramount to know whom you are selling to; in other words, if your core customer is a mother shopping for her home and family it would be a good idea to stock appropriate product offerings and make then readily available.

Somewhere along the line, specialty retailer Kohl's (NYSE:KSS) lost sight of the big picture: Why are we in business? The wrong answer would be to compete with Target (NYSE:TGT), Wal-Mart (NYSE:WMT), Sears (NYSE:S), J.C. Penney (NYSE:JCP), and TJX Companies (NYSE:TJX). The conclusion that Kohl's established was to serve moms on the go and make their lives easier.

Looking at Kohl's third-quarter results, it has become abundantly clear that the company has worked hard to get a tight rein on its inventory and has improved its merchandising mix. Total sales rose 14.6% in the period, and same-store sales were up 1.2%. The company's earnings of $0.42 per share were in line with the analysts' consensus estimate and 20% ahead of last year's earnings of $0.35 per share.

Kohl's opened 48 new stores in the quarter, entering markets such as San Francisco (11 stores), Salt Lake City (five stores), Rochester, N.Y. (three stores), and Portland, Maine (two stores). The company currently operates 637 stores in 40 states and plans to open an additional 95 stores in 2005 (33 in the first quarter alone).

In line with management's drive to reconnect with mothers, Kohl's announced today that it will launch a new brand of maternity clothes in all of its stores. The "Oh Baby! By Motherhood" line will be the company's sole maternity apparel supplier and will make its way into stores across the country in February 2005. With most items attractively priced below $40, Kohl's will be able to establish a connection with mothers-to-be that will hopefully encourage store loyalty for years to come.

Kohl's is probably in its best selling position in years as it charges into the upcoming holiday season. The company has aligned its inventory levels with demand, adjusted marketing and advertising placements, and improved its in-store shopping environment. The result of these adjustments has been an improving merchandising mix, which has had a positive impact on gross and operating margins.

The company's shares, which trade at 24 times this year's earnings estimate of $2.17 per share, appear to be attractive relative to the company's 26% earnings growth rate this year.

You don't have to be a mother to enjoy these other takes:

Fool contributor Phil Wohl spent more than 12 years on Wall Street and was a specialty retail analyst for a number of years.