* Third-qtr EPS 91 cts vs Street View 88 cts
* Sees Q4 same-store sales up 3-4 pct
* Sees Q4 EPS $2-$2.08 vs Street View $2.16
* Kohl's shares down 2.6 percent premarket
By Phil Wahba
Nov 8 Kohl's Corp on Thursday said it
expects sales to rise this holiday quarter but gave a profit
forecast that missed Wall Street's expectations and raised
concerns the department store chain may have to offer discounts
to draw in customers.
The retailer, which operates 1,146 stores, reported a
stronger-than-expected third-quarter profit, as business perked
up later in the period.
Kohl's, which competes most directly with Macy's Inc
and J.C. Penney Co Inc for middle-class shoppers,
expects sales at stores open at least year, or same-store sales,
to be up 3 percent to 4 percent in the quarter that includes the
Christmas shopping period.
That would mark a major improvement over last year's holiday
period, when same-store sales slumped 2.1 percent, and would be
in line with higher-end Macy's forecast for a 4.2 percent jump.
But its profit forecast of $2.00 to $2.08 per share for the
holiday quarter - which accounts for about 40 percent of its
annual net income - missed the $2.16 Wall Street analysts had
been expecting, according to Thomson Reuters I/B/E/S.
"That tells me they believe the environment is going to be a
little more promotional," Brian Yarbrough, consumer
discretionary analyst for Edward Jones said, referring to the
prospect of having to offer discounts and give up some profit
margin to compete with rivals.
Its shares were down 2.6 percent at $52.90 in premarket
Macy's also gave a disappointing holiday quarter profit
forecast this week.
Kohl's earlier this year frequently reported monthly sales
numbers that disappointed Wall Street, which it blamed on its
efforts to keep inventory lean to avoid having to sell unsold
merchandise at deep discounts.
As a result, some popular items sold out. But many of its
fashions aimed at young adults failed to impress shoppers, also
Kohl's chief executive said in a statement that the retailer
had made "investments" in inventory to offer a broader and more
plentiful array of goods for the holiday season.
In October, with more merchandise on hand, Kohl's reported
sales well above analyst projections, suggesting the retailer
was putting that problem behind it.
Kohl's posted a third-quarter profit of $215 million, or 91
cents per share, up slightly from $211 million, or 80 cents per
share, a year ago. That was 3 cents better than analyst
The department store chain has been able to boost its
earnings per share by buying back shares, and said its board
raised its share buy-back program by $300 million to $3.5
Gross margin, which reflects the profitability of goods
sold, fell half a percentage point to 38.1 percent.
As previously reported, same-store sales rose 1.1 percent in
the third quarter, while overall sales rose 2.6 percent to $4.49
Separately, Dillard's Inc, a higher-end department
store chain, reported a 5 percent rise in same-store sales,
above the 3 percent increase analysts were expecting. Its gross
margin for its retail operations edged up 0.4 points to 37.1
percent, reflecting its ability to resist having to discount.