) has started the year 2012 with operating earnings of 63 cents in
first quarter, beating the Zacks Consensus Estimate by 3 cents
driven by top-line growth. The earnings, however, missed the
prior-year quarter's earnings by 6 cents due to lower pricing.
Sales and Margins
Net sales climbed up 1.9% to $4.243 billion in the quarter.
However, the results slightly missed the Zacks Consensus Sales
Estimate of $4.256 billion.
Kohl's same-store sales for the quarter ending April 28
increased 0.2%, while total sales climbed 1.9%, driven by
accessories and home divisions along with positive response in
However, comparable store sales dipped 3.5% for the four-weeks
ended April 28, 2012, after an increase of 10.2% in the four-week
month ended April 30, 2011. Kohl's total sales dipped 1.9% in the
month of April 2012 to $1.25 billion, as compared to 12.1% growth
with sales of $1.28 billion in the year-ago month. The total sales
for the period decreased, due to early arrival of Easter and warm
weather in the month of March.
The gross margin shrank by 220 basis points to 35.9%, as the
management implemented lower pricing to provide value to consumers.
Increased cost of merchandise also led to the decline in gross
margins. Operating margin contracted 180 basis points to 7.6% due
to lower gross margins during the quarter.
Kohl's opened 9 stores (includes one relocated store) and closed
one store during the quarter, and now operates 1,134 stores in 49
states, compared to 1,097 stores a year ago.
For the second quarter 2012, the company expects earnings per share
to grow in the range of 96 cents to $1.02 per share, on the back of
an expected sales increase in the range of 2% to 3% and a
comparable store sales increase in the range of flat to 1%. The
company also plans to buyback shares worth $250 million in the
second quarter of 2012.
Kohl's continues to expect its 2012 earnings per share to be
$4.75. Further, the company plans to open approximately 10 more
stores in the fall season, and remodel approximately 50 stores in
Kohl's has had a consistent merchandise mix over the past few
years. In addition, the company's pricing strategy, expense
management and overall profitability culture is focused on
maintaining a low-cost structure. A strong balance sheet coupled
with strong cash balances and attractive dividend yields makes the
Kohl's, which competes with
Ross Stores Inc.
), holds a Zacks #3 Rank (short-term 'Hold' rating). We maintain a
long-term Neutral recommendation on the stock.
KOHLS CORP (KSS): Free Stock Analysis Report
ROSS STORES (ROST): Free Stock Analysis Report
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