Kohl's Corp. posted disappointing sales growth in the first
quarter after a weak February, though the retailer logged a
surprise increase in profit.
Shares fell 5.7% in premarket trading.
Chief Executive Kevin Mansell said sales accelerated in March
and April and noted that margins improved as the company had a
"more balanced promotional calendar."
As a middle-market department store, Kohl's has been squeezed on
the high end by Macy's Inc. and on the lower end by Wal-Mart Stores
Inc. and Target Corp.
But recent upbeat results indicate that retailers catering to
lower income Americans are making a comeback, a sign that a
battered segment of consumers is on the mend.
Last year, Kohl's outlined a multiyear plan to return to growth,
which included stocking better products, offering more compelling
savings, tailoring offerings to local tastes and attracting top
talent.
In the latest quarter, Kohl's reported sales excluding newly
opened or closed stores grew 1.4%, compared to a year-earlier
decline of 3.4%. Consensus Metrix had forecast growth of 2.6%.
Overall, for the quarter ended May 2, Kohl's reported a profit
of $127 million, or 63 cents a share, up slightly from $125
million, or 60 cents a share, a year earlier.
Sales grew 1.3% to $4.12 billion.
Analysts polled by Thomson Reuters had expected per-share
earnings of 55 cents and revenue of $4.19 billion.
Gross margin improved slightly to 36.9% from 36.8%.
On Wednesday, Macy's detailed plans to push its best stores
upscale, as it works to squeeze more growth from a slowing
department store business.
The plans came after the retailer reported a second straight
quarter of weak sales, citing rough winter weather, trouble with
West Coast ports and lower spending by tourists.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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