* Kohl's, Nordstrom raise FY 2011 EPS guidance
* Nordstrom sees FY 2011 comp sales up 4-6 pct
* Nordstrom margin helped by full price selling
* Nordstrom shares up 3 percent after hours
By Phil Wahba
NEW YORK, Aug 11 Mid-tier department store
chain Kohl's Corp (KSS.N) and upscale rival Nordstrom Inc
(JWN.N) both raised their profit forecasts for 2011 after each
reported stronger than expected quarterly profit on Thursday.
The two retailers also expect sales to keep rising.
Kohl's, with customers who are middle class but typically
less affluent than those of rival Macy's Inc (M.N), said
business and profits are being helped by its lines of items
shoppers can't find elsewhere, particularly its celebrity
clothing lines such as Simply Vera by Vera Wang.
Nordstrom, which has reported strong sales gains all year
as luxury shoppers have returned, said it now expects fiscal
2011 earnings per share of between $2.95 and $3.10, compared to
an earlier range of $2.80 to $2.95. Its second quarter profit
was boosted by selling more items at their full price rather than
at a discount. [ID:nN1E77A1MS]
Kohl's gross margin rose 0.4 percentage points despite higher
cotton costs, suggesting it has been able to pass on higher cotton
costs to shoppers.
"The gross margin forecast is a good indicator of how their
consumer is accepting price increases," said Walter Stackow, a
portfolio manager with asset manager Manning & Napier.
Kohl's, which operates nearly 1,100 department stores, raised
its full-year earnings per share forecast for fiscal 2011 by 20
cents, to a range of $4.45 to $4.60, above analysts' average
forecast of $4.40.
At Nordstrom, gross margin rose 1.35 percentage points to 37.4
percent helped primarily by more sales at full prices and tighter
Both chains said bad debt expenses stemming from customer
credit card delinquencies had dropped during the quarter.
Nordstrom said delinquencies as a percentage of credit card
receivables at the end of the second quarter were 2.7 percent,
compared to 3.5 percent a year earlier, reflecting shoppers'
Nordstrom said it now expects fiscal 2011 -- ending in January
2012 -- sales at stores open at least one year to rise 4 percent
to 6 percent, up from an earlier range of 2 percent to 4 percent.
The two department store chains were the latest retailers to
raise their outlook for the rest of the year despite market
volatility and stubbornly high unemployment that has been a drag
on consumer spending.
Macy's Inc (M.N) also raised its sales and profit outlook when
it reported quarterly results on Wednesday. [ID:nN1E77906X]
Kohl's shares closed the day up 7.2 percent at $47.50,
while Nordstrom shares were up 5.5 percent to $42.33 during the
regular trading session. Nordstrom shares rose another 3 percent
to $43.60 in after-hours trading after its results were
(Reporting by Phil Wahba; Editing by Phil Berlowitz)