) adjusted earnings of 91 cents per share in the third quarter of
2012 beat the Zacks Consensus Estimate of 87 cents by 4.6%.
Earnings exceeded the prior-year quarter earnings by 14% owing to
growth in revenues and comparable store sales. The results also
exceeded management's guidance range of 83 cents to 89 cents.
Sales and Margins
Net sales climbed 2.6% from the prior-year quarter to $4.5
billion in the quarter driven by increase in comparable store
sales. The company results were in line with the Zacks Consensus
Estimate. Sales growth was at the higher end of the top-line
growth guidance range of 1%-3%.
Kohl's comparable store sales increased 1.1% from the
prior-year quarter. It was within the guidance of growth in the
range of flat to 2%. Sales picked up in the quarter, driven by an
improvement in inventory levels.
Gross margin declined 50 basis points to 38.1% due to
increased cost of merchandise. Operating margin was flat at
Kohl's ended the quarter with 1,146 stores in 49 states,
compared with 1,127 stores a year ago. Kohl's opened 21 new
stores, including 1 relocated store, closed 1 store and completed
50 remodels, as of October 27, 2012.
Other Financial Details
On November 7, Kohl's board declared a quarterly cash dividend
of 32 cents per share, to be paid on December 26, 2012 to
shareholders of record as of December 5, 2012.
Kohl's board also increased the company's share repurchase
authorization by $3.2 billion, under its existing share
Kohl's provided its outlook for the fourth quarter of fiscal
2012. Earnings are expected in the range of $2.00 to $2.08 per
share. Sales are expected to grow 7% to 8%, while comparable
store sales are anticipated to increase 3% to 4% in the fourth
quarter of fiscal 2012. Kohl's also expects to buy back shares
worth $300 million in the quarter.
For fiscal 2012, the company tightened its previously provided
earnings guidance of $4.50 to $4.65 per share to a range of $4.52
to $4.60 per share.
Kohl's competes with
The TJX Companies, Inc.
). Currently, we have a Neutral recommendation on Kohl's
Corporation. The stock carries a Zacks #3 Rank (a short-term Hold
We are encouraged by the company's prudent expense management
across many of Kohl's stores. A strong balance sheet coupled with
strong cash balance and attractive dividend yield makes the stock
attractive. However, we remain concerned about the rising
commodity costs, increased volatility in the financial markets
and overall uncertainty in the macroeconomic environment.
KOHLS CORP (KSS): Free Stock Analysis Report
TJX COS INC NEW (TJX): Free Stock Analysis
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