August 11, 2011 / 9:45 PM / 6 years ago

WRAPUP 1-Kohl's, Nordstrom expect higher profit, sales growth

* 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 (Reuters) - 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. [ID:nN1E76H1E1]

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 inventory.

    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’ improving finances.

    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 published.

    Reporting by Phil Wahba; Editing by Phil Berlowitz

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