DOW JONES NEWSWIRES
Kohl's Corp.'s (KSS) fiscal second-quarter earnings fell 3% on
weaker sales, though the department-store chain was able to boost
margins.
The retailer also raised its profit target for the year to $2.59
to $2.70 from May's boosted view of $2.19 to $2.42. But it
projected earnings for the current quarter below analysts'
expectations.
Kohl's expects fiscal third-quarter earnings of 40 cents to 44
cents on flat sales, plus or minus 1%, and same-store sales down 3%
to 5%. Analysts polled by Thomson Reuters were looking for earnings
of 47 cents and total sales up 1% to $3.85 billion.
Retailers have continued to struggle amid a downturn in consumer
spending. Though some signs of improvement have surfaced in recent
months, they may have more to do with cost-cutting and
inventory-reductions than with shoppers spending more money.
Consumers have been buying mostly basic items, although Kohl's said
last week it saw strong same-store sales growth in the accessories,
home and footwear categories.
President and Chief Executive Kevin Mansell said in May the
difficult economy was helping the company gain market share from
competitors, but warned the effects of the recession could still be
felt. He reiterated Thursday that results indicated market-share
gains and said the company continues to improve inventory
management and margins.
For the period ended Aug. 1, Kohl's posted income of $229
million, or 75 cents a share, down from $236 million, or 77 cents,
a year earlier. Kohl's said net sales increased 2.2% to $3.81
billion as same-store sales fell 2.3%.
Gross margin rose to 40% from 39.6%.
Kohl's has grown in recent years in part by offering exclusive
lines from designers, such as Vera Wang, as well as low-cost
products. It also acquired some of the now-defunct Mervyn's stores
after Mervyn's went into bankruptcy last summer. As of Aug. 1
Kohl's operated 1,022 stores in 49 states, up 6.8% from a year
earlier. The company plans to open another 37 stores later this
year.
Kohl's shares were off 1.7% in premarket trading to $51.35.
-By Kerry Grace Benn and Kevin Kingsbury, Dow Jones Newswires;
212-416-2353; kerry.benn@dowjones.com