* Third-qtr EPS 91 cents vs Street View 88 cents
* Sees Q4 same-store sales up 3 percent to 4 percent
* Sees Q4 EPS $2-$2.08 vs Street View $2.16
* Kohl's shares down 4.5 percent premarket
By Phil Wahba
Nov 8 Kohl's Corp said on Thursday it
expects sales to rise this holiday quarter, but gave a profit
forecast that missed Wall Street's expectations because of what
it anticipates will be a highly competitive Christmas period.
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 that Wall Street analysts
had been expecting, according to Thomson Reuters I/B/E/S.
"We are assuming it is going to be a very promotional
Christmas, similarly to last year," Chief Executive Kevin
Mansell told analysts.
Last year, discounts ate into profits and sales at Kohl's,
which draws a more price-sensitive clientele than Macy's.
Kohl's shares fell 3.8 percent to $52.26 in midday trading.
S&P Capital IQ lowered its opinion on Kohl's stock to "hold"
from a "buy" rating.
Macy's also gave a disappointing holiday quarter profit
forecast this week.
A FOCUS ON INVENTORIES
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
Mansell said in an earlier 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 analysts' projections, suggesting the retailer
was putting that problem behind it.
"I do believe they have the inventories where they need to
be, and that can drive the holiday shopping season," said Brian
Yarbrough, a consumer discretionary analyst for Edward Jones.
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 analysts'
The department store chain has been able to boost its
earnings per share by buying back stock, and said its board
raised its stock-buyback 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 point to 37.1
percent, reflecting its ability to resist having to discount.
Dillard's stock rose 4.6 percent to $84.52.