Kohl’s Q1 Profit Down 15% as Sales Decline

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kohlsMenomonee Falls, WI—Kohl’s Corp. today posted lower-than-expected first quarter earnings as sales slipped.

For the quarter ended May 3, the department store company said net profit fell 15%  to $125 million, or 60 cents a share, compared with last year’s $147 million, or 66 cents a share. That was lower than the 63 cents a share analysts had expected.

Management Shake-Up Ahead?

Net revenue declined 3.1% to $4.07 billion, missing analysts’ consensus expecting $4.22 billion in sales. Comparable store sales were down 3.4%, again missing analysts’ estimate for 0.2% increase.

Gross margin widened to 36.8% from 36.4%. And transactions per store fell 4.5 in the quarter. Online sales were up double digits but still missed Kohl’s goals.

“We did not achieve our first quarter sales goals, but we were encouraged by the improvement in sales as the quarter progressed,” said Kevin Mansell, chairman/president/ceo. “Our teams managed our inventory levels appropriately and expenses were controlled throughout the organization during the quarter.”

Kohl’s has remained profitable but its sales continue to be down. On Tuesday, the Wall Street Journal reported that Mansell plans a management shake-up, including naming a new chief merchandising officer that could succeed him as chief executive.

As part of its strategic to reinvigorate sales and performance, Kohl’s new added new beauty departments and a higher concentration of national brands after relying too heavily on its own private brands.

“We have lost some traction with our core customers as the place to get great brands they recognize,” said Wes McDonald, Kohl’s chief financial officer. “Bringing the brands back is what the traffic driving is all about.”

Kohl’s also recently initiated a new loyalty program to reward regular customers.

Looking ahead, Kohl’s reiterated its full year earnings forecast of $4.05 to $4.45 a share.

On Wednesday, the Kohl’s board of directors declared a quarterly cash dividend on the company’s common stock of 39 cents a share payable June 25 to shareholders of record at the close of business on June 11.