Department stores chain Kohl's Corp. (KSS) Thursday posted higher profit for the third quarter, driven by inventory management and expansion of exclusive brands. On a per share basis, earnings rose from last year and topped the Street view. In addition, the company raised its earnings forecast for the fourth quarter as well as full year.
The Menomonee Falls, Wisconsin-based company's third-quarter net income was $193 million or $0.63 per share, compared to $160 million or $0.52 per share in the prior-year quarter.
On average, 20 analysts polled by Thomson Reuters expected the company to post earnings of $0.61 per share. Analysts' estimates typically exclude special items.
Quarterly net sales totaled $4.05 billion, 6.5% higher than the previous year's $3.80 billion, and surpassed the $4.03 billion revenue consensus estimate of seventeen analysts polled by Thomson Reuters. Comparable store sales for the quarter rose 2.4%.
Kevin Mansell, Kohl's chairman, president and chief executive officer, said, "We were pleased with our sales performance in the third quarter as we achieved a positive comparable sales increase in a very difficult environment."
Further, the company noted that it continued to experience improvement in inventory management and increased penetration in "Only at Kohl's" brands that have led to increased cash flow and consistently improved gross margins.
For the nine-month period, the company reported net income of $560 million or $1.83 per share, compared to $549 million or $1.79 per share in the year-ago period.
Net sales for the 39 weeks ended October 31, 2009 were $11.5 billion, up from $11.2 billion reported in the comparable period of the previous year.
During the year-to-date period, the company opened 56 stores. Kohl's ended the quarter with 1,059 stores in 49 states, compared with 1,004 stores in 48 states at the same time last year. The company completed 51 store remodels, compared to 36 stores last year.
Looking forward to the fourth quarter, the company currently projects earnings per share between $1.14 and $1.24, an increase from the previously communicated outlook, ranging between $0.99 and $1.06. Sixteen Wall Street analysts have a consensus earnings estimate of $1.25 per share.
Total sales growth for the fourth quarter is now expected in the range of 3% - 6%, compared to the prior guidance of negative 1% - positive 1%. In addition, the company revised its comparable store sales forecast between negative 1% and positive 2%, versus its previous forecast of negative 5% - negative 3%. Fourth-quarter gross margin, as a percent of sales, is expected to increase 50 - 60 basis points over last year, and selling, general and administrative expenses to increase between 4% and 5%.
For fiscal 2009, the company now forecasts earnings to be in the range of $2.98 - $3.08 per share, while analysts expect earnings of $3.02 per share. Earlier, the company had expected full-year earnings in the range of $2.59 - $2.70 per share.
Mansell added, "As we enter the fourth quarter, we will continue to focus on providing value for our customers as we expect them to continue to be conservative in their spending during this holiday season."
Among other players in the field, Macy's Inc. (M) posted a narrower loss for the third quarter, totaling $35 million or $0.08 per share, compared to a loss of $44 million or $0.10 per share a year ago. Net sales declined 3.9% to $5.28 billion from $5.49 billion in the previous year.
Macy's expects fourth-quarter earnings per share of $1.00 - $1.05, excluding restructuring-related costs. Fourth-quarter same-store sales are currently expected to be down 1% - 2%, which calculates to down 2.1% - 2.6% in the second half of 2009, which is better than previous second-half outlook of down 5% - 6%.
Another peer, JCPenney Co. Inc. (JCP) recently said it expects third-quarter earnings between $0.10 and $0.11 per share, including a charge of about $0.03 per share, primarily related to non-recurring real estate impairments, compared to its prior forecast of $0.03 - $0.10 per share. The third-quarter results are scheduled to be released on November 13, with analysts expecting earnings of $0.11 per share, on revenues of $4.18 billion. On November 5, JCP reported a 3.2% decline in total sales to $4.18 billion for the third quarter, from $4.32 billion posted in the previous year.
Kohl's shares, which have been trading between $24.28 and $60.89 in the past 52 weeks, closed Wednesday's trading session at $54.59.
For comments and feedback: editorial@rttnews.com