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NEW YORK - Kohl's Corp. saw higher profit
and solid sales in the fourth quarter as the department store operator
attracted more customers who took advantage of its value-priced
store-label brands, but still spent less per trip.
The chain, known for its moderately
priced products, also gave a full-year earnings prediction within range
of Wall Street's expectations. But its first-quarter earnings guidance
was below analysts' views, and it offered a cautious sales outlook for
the year amid an uncertain economy. Shares rose $2.49, almost 5 percent,
to $54.08 as results beat Wall Street forecasts.
"Demand will continue to be weak
throughout 2010" and sales will be fueled by taking market share
away from rivals, Kevin Mansell, Kohl's president, chairman and CEO told
investors, sounding the same theme offered by other major retailers this
week.
Kohl's said it plans to open 30 new
stores this year and remodel 90 others, up from its previously planned
65. It also said it will roll out marketing and merchandising strategies
tailored to certain regions, such as the Southeast, after it saw success
with that strategy in the Southwest.
Like many retailers, Kohl's stuck with
planned promotions amid soft economic conditions during the holiday
season, but didn't have to use deep discounts because it was able to
keep its inventory levels in line with demand.
Kohl's, based in Menomonee Falls, Wis.,
also capitalized on exclusive brands such as Dana Buchman, Simply Vera
Vera Wang and LC by Lauren Conrad, and gained market share from the
closings of competitors such as Mervyn's.
Store label or exclusive brands accounted
for 42.7 percent of the fourth-quarter sales and helped drive profit,
the company said.
For the period ended Jan. 30, earnings
rose 28 percent to $431 million, or $1.40 per share, from $336 million,
or $1.10 per share, in the same period a year earlier.
Analysts surveyed by Thomson Reuters
expected $1.37 per share.
Sales increased 9 percent to $5.68
billion from $5.23 billion, narrowly topping Wall Street's forecast of
$5.67 billion.
Executives told analysts that consumers
continue to be financially strained and are looking to stretch their
dollars further.
Wes McDonald, Kohl's chief financial
officer, told investors that while customer counts rose 7.3 percent per
store for the quarter, the amount that shoppers spent per transaction
dropped 8.2 percent as shoppers continue to purchase fewer items per
trip.
In an interview with The Associated
Press, Mansell said that shoppers continue to focus on necessities like
coats and underwear, but the big difference from a year ago is that
they're not cutting back more.
"The message is very clear,"
said Mansell. "With less to spend ... they are going to be very
selective in (where) they chose to shop at."
Sales at stores open at least a year grew
4.5 percent during the quarter. The measure is a key indicator of
retailer performance since it measures growth from existing stores
rather than newly opened ones.
Full-year profit improved to $991
million, or $3.23 per share, from $885 million, or $2.89 per share, in
the prior year.
Sales rose 5 percent to $17.18 billion
from $16.39 billion in 2009, with sales at stores open at least a year
up 0.4 percent.
Kohl's expects fiscal 2010 earnings of
$3.40 to $3.63 per share. Analysts predict income of $3.63 per share.
The retailer anticipates profit of 48
cents to 52 cents per share for the first quarter. Wall Street projects
profit of 54 cents per share.
Kohl's said its outlooks assume sales
growth of 4 percent to 6 percent and an increase of 1 percent to 3
percent for sales at stores open at least a year.
Kohl's had 1,058 stores in 49 states at
year's end.
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