Despite Sales Slip, Kohl’s Beats Q1 Profit Expectation

Jennifer Lopez at a preview showing of her collection for Kohl's this week.

Jennifer Lopez at a preview showing of her collection for Kohl’s this week.

Menomonee Falls, WI—Kohl’s Corp. reported today that its first quarter profit fell 4.5% but the nation’s third largest department store company still managed to beat analysts’ expectations.

For the quarter ended May 4, Kohl’s posted earnings of $147 million, or 66 cents a share, compared to $154 million, or 63 cents a share, a year ago. That was still better than the 57 cents a share that analysts had expected.

Net revenue edged down1% to $4.2 billion while comparable store sales were down 1.9%. Sales missed analysts’ estimate for $4.27 billion. E-commerce sales, however, jumped 31% as Kohl’s continued to invest in new technologies and order fulfillment from its stores.

‘A Lot of Pent-Up Demand’

Gross margin widened to 36.4% from 35.9% while overhead expenses were down by 0.5%.

The company said after a slow start, first quarter sales improved considerably in April, after weather improved in the worst hit regions such as the Midwest, mid-Atlantic states and Northeast. Still, sales of seasonal apparel declined 8%, hurting overall sales.

Kohl’s noted that even with the lowered sales, the company managed to beat expectations thanks to improved gross margin and expense management.

The sales uptick the retailer experienced in April reinforced its projected earnings of $1 to $1.08 a share in its second quarter on sales growth of 1% to 3%. Analysts’ most recent estimate expected $1.05 a share on sales increase of 3%.

“There’s a lot of pent-up demand for spring merchandise out there,” Kevin Mansell, chief executive, said during a conference call with analysts. “We saw some of that breaking loose in April.”

 

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Jeff Prine

Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com