DOW JONES NEWSWIRES
Kohl's Corp.'s (KSS) fiscal first-quarter earnings fell a
less-than-expected 10% as higher costs hurt the bottom line, but
revenue and margins improved.
The retail chain also raised its fiscal-year earnings target to
$2.19 to $2.42 a share compared with its downbeat February
projection of $2 to $2.30.
Shares rose 2.5% premarket to $43. The stock has rallied by
nearly 75% since hitting a 10-year low in November.
Retailers have struggled as consumers have curbed spending.
While some small signs of improvement surfaced in recent months,
they may have more to do with cost-cutting and inventory-reduction
efforts than with shoppers reopening their wallets. Consumers have
been buying mostly basic items and Kohl's reflects that trend,
reporting last week that children's clothes were a top segment.
For the quarter ended May 2, the company reported a profit of
$137 million, or 45 cents a share, down from $153 million, or 49
cents a share, a year earlier. The company last week raised its
forecast to 43 cents to 44 cents.
Gross margin rose to 37.6% from 36.8%. President and Chief
Executive Kevin Mansell said merchandise margins improved through
strong inventory management and Kohl's focus on exclusive
brands.
Kohl's last week reported revenue edged up 0.4% to $3.64
billion, topping Wall Street's view, as same-store sales were down
a less-than-expected 4.2%.
The company 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 May 2, Kohl's operated 1,022 stores in 49 states, up 6.8% from a
year earlier, and an increase of 18 since the end of January. The
company plans to open an additional 37 stores later this year.
For the fiscal second quarter, the company expects earnings of
56 cents to 64 cents, while analysts were looking for 61 cents.
-By Tess Stynes, Dow Jones Newswires; 201-938-2473;
tess.stynes@dowjones.com