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In
this file photo, a shopper pushes a shopping cart after
entering the Kohl's department store in
Anchorage
,
Alaska
. Kohl's Corp.'s sales of exclusive brands and tight
inventory control helped its third-quarter profit rise 21
percent, the company said on Thursday.
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NEW YORK - Kohl's said it is set to
battle it out for market share during the upcoming holiday season,
as it reported Thursday that consumers responded to its exclusive
brands and moderate prices and sent profit up 21 percent in the
third quarter.
As the economy makes tentative steps
toward a recovery, midpriced chain Kohl's has fared better than
higher-priced department stores. Kohl's said it saw an increase in
customers in the third quarter.
Sales in stores open at least one
year — considered a key measure of a retailer's health — rose
2.4 percent during the three months ended Oct. 31. That was fueled
by more transactions rather than an increase in transaction size,
however, indicating that while there might be more customers, they
are still spending less.
Still, it is the first rise in the
sales figure since the second quarter of 2007, even though it's
against a weak comparison with last year.
The results led the department-store
chain to raise its full-year earnings guidance. But CEO Kevin
Mansell said he expects consumers to "continue to be
conservative" in their spending over the holidays.
"People are still very careful
with their pocketbook," Mansell said in a telephone interview
with The Associated Press. "We're not able to convince them to
buy that extra thing. It's more mission shopping, really."
Basics like coats and underwear
continue to outperform fashion categories in women's apparel, he
added. And while accessories are strong sellers, sterling silver
jewelry continues to outperform higher-priced items.
Kohl's has benefited from its
expansion of exclusive brands like Dana Buchman, Simply Vera Vera
Wang, and LC by Lauren Conrad, which launched in October, as well as
cost-cutting and the shuttering of competitors like Mervyn's.
The company said it is accelerating
the rollout of the LC by Lauren Conrad label from the 300 stores it
occupies currently to all 1,059 stores nationwide in March, from an
earlier goal of by next fall.
Stifel Nicolaus analyst Richard Jaffe
said consumers are responding to Kohl's nationally recognized brands
like LC Lauren Conrad, Dana Buchman and others. Some of its brands,
such as Dana Buchman, used to be sold at more upscale department
stores like Saks Fifth Avenue, but have been reinvented for more
frugal Kohl's shoppers.
Others, like Simply Vera by Vera
Wang, are lower-priced lines from high-end designers.
"We believe that the consumer
finds greater value in nationally recognized brands that they
perceive have higher quality, greater fashionability and more
status," he wrote.
Profit for the three months ended
Oct. 31 rose to $193 million, or 63 cents per share, compared with
$160 million, or 52 cents per share last year.
Revenue rose 7 percent to $4.05
billion, from $3.8 billion a year ago. Analysts expected earnings of
61 cents per share on revenue of $4 billion, according to Thomson
Financial.
Kohl's, based in Menomonee Falls,
Wis., raised its full-year earnings guidance to $2.98 to $3.08 per
share, from previous guidance of $2.59 to $2.70 per share. Analysts
expect a profit of $3.02 per share.
In the fourth quarter, it expects
total sales to rise 3 percent to 6 percent, implying sales of $5.4
billion to $5.55 billion. The company expects a profit of $1.14 to
$1.24 per share for the fourth quarter, just short of analyst
predictions of $1.25 per share.
Shares rose 6 cents to $54.65 during
midday trading.
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