Menomonee Falls, WI—Kohl’s Corporation raised its full-year earnings forecast on Thursday after posting a 6% rise in first quarter profit thanks to higher sales and margins and tight control of costs.
For the quarter ended April 30, Kohl’s said its net income rose to $211 million, or 73 cents a share, from $199 million, or 64 cents a share a year ago. The 14% increase in per-share earnings reflects a reduction in the number of shares outstanding.
Net sales were up 3.1% to $4.2 billion and same-store sales increased 1.3% below the company’s expectations for a gain of 2% to 4%. Lower sales of spring merchandise due to cooler temperatures and markdowns also caused Kohl’s gross margin to come in flat at 38.1%, below guidance for an increase of 10 basis points to 30 basis points.
Annual Online Sales Expected to Hit $1 Billion
However, the company raised its guidance for the full year, reflecting its latest results and expected share buybacks. Kohl’s also expects strong reaction to upcoming introduction of the Jennifer Lopez and Marc Anthony merchandise that will be more “aspirational,” or higher-quality, offerings.
“We have strengthened our marketing for the second quarter and believe that we will see pent-up demand for seasonal businesses which would allow us to achieve a better comp and even stronger financial results in the second quarter,” noted Kevin Mansell, Kohl’s chairman, president and ceo.
Consequently, Kohl’s raised its earnings forecast for the full year to a range of $4.25 to $4.40 a share, higher than analysts’ average estimate expecting $4.36 a share.
Moreoever, the retailer also said its e-commerce business is on track to increase 40% to $1 billlion in sales this year.
As consumers move their dollars from in store to online shopping, the company will be opening smaller stores than the typical 90,000-square-foot unit that have been the norm. New stores would likely be 60,000-square-foot formats like the company built in 2002 for smaller communities.
“All stores going forward will be disproportionately smaller,” Mansell said at the company’s annual meeting in Milwaukee on Thursday.