Kohl's, Nordstrom cut year views as holidays loom

By Sarah Coffey

NEW YORK (Reuters) - Kohl's Corp (KSS.N) and Nordstrom Inc (JWN.N), two large U.S. retailers, reported sharply lower quarterly profits on Thursday and warned of worse-than-expected results for the rest of the year, just weeks before the critical holiday shopping season gets under way.

Shares of both companies slid in extended trade after the announcements. Mid-priced apparel and home goods retailer Kohl's said quarterly profit fell 17 percent and cut its 2008 forecast. Upscale department store Nordstrom said profit fell a whopping 57 percent even as wealthy customers searched for bargains.

"We are in unprecedented times and customers are lacking confidence today," Nordstrom President Blake Nordstrom said on a conference call with investors.

Consumers grappling with falling home values, job losses and a bleak economic picture have pulled back on purchases of all but essential items, and shoppers are expected to keep a tight grasp on their wallets well beyond December.

"Department stores have been in trouble for a long time. This downward trend will continue into the holidays and well into 2009," said Dean Hillier, a consumer and retail consultant with A.T. Kearney.

Retailers, meanwhile, are bracing for what is expected to be the worst holiday season in nearly 20 years by tightening inventories, closing stores, dropping unprofitable merchandise and offering deep discounts.

"We expect the holiday season to be the most difficult environment for the consumer in years," Kohl's Chief Executive Kevin Mansell said on his company's conference call.

Kohl's profit fell to $160.2 million, or 52 cents per share, from $194.0 million, or 61 cents, a year earlier.

That was above the average analyst forecast of 51 cents per share, according to Reuters Estimates, helped by sales of its private brands and lower inventory levels.

Kohl's forecast full-year earnings of $2.69 to $2.84 per share, and 90 cents to $1.05 per share for its fourth quarter, lower than a previous full-year view of $3.02 to $3.18 per share and $1.26 to $1.34 for the fourth quarter.

Kohl's said it expects fourth-quarter sales at stores open at least a year, or same-store sales, to be down 8 to 12 percent.

Analysts polled by Reuters Estimates were looking for a full-year profit of $2.99 per share and $1.23 per share for the fourth quarter.

Kohl's said quarterly net sales fell 0.6 percent to $3.8 billion. Analysts had expected sales of $3.88 billion. Quarterly sales at stores open at least a year fell 6.7 percent.

Shares of Kohl's fell more than 4 percent in extended trading from their close of $30.57 earlier on Thursday.

NORDSTROM SEES SLOWDOWN