Menomonee Falls, WI—Kohl’s reported today that its first quarter profit was off 23% due mostly to a lower pricing strategy the department store initiated.
For the quarter ended April 28, Kohl’s posted net income of $154 million, or 63 cents a share, compared with $201 million, or 69 cents, a year ago.
Total revenue was up 1.9% to $4.2 billion. Comparable store sales edged up 0.2% which retail analysts referred to as basically flat.
Kohl’s earnings came in ahead of analysts’ average estimate for 61 cents a share. However, the company just missed on the consensus estimate for sales of $4.25 billion.
“Our first quarter results reflect the implementation of our strategy to initiate lower pricing in order to provide greater value to our customers,” said Kevin Mansell, chairman/president/ceo. “This planned action led to significantly lower gross margins for the quarter. Strong management of expenses allowed us to achieve our earnings goal for the quarter.”
Mansell said Kohl’s had improved its inventory position for the second quarter as the company prepared for the important back to school season and “greatly improve our sales for the fall season.”
But the company gave what retail analysts referred to as a “tepid” forecast: second quarter earnings of 96 cents to $1.02 a share on sales increasing 2% to 3%, and comps sales flat to up 1%. That estimate, however, was well below analysts’ average estimate for $1.13 a share.
For the full year, Kohl’s reiterated its forecast of $4.75 a share, which is 1 cent ahead of analysts’ average estimate.