Kohl’s 4th-quarter profit rises on tight inventory management, better sales

Kohl’s 4Q profit rises on sales, tight inventory

MENOMONEE FALLS, Wis. — Kohl’s Corp. grew its profit in the fourth quarter as it kept its inventory levels lean and took advantage of shoppers’ trend toward buying value-priced goods, the discount retailer said Thursday.

The department store chain, known for its moderately priced products, also gave a full-year earnings prediction within range of Wall Street’s expectations. Its first-quarter guidance was below analysts’ views.

Kohl’s stock fell $1, or 2 percent, to $50.59 in premarket trading.

The company has stuck with planned promotions amid soft economic conditions during the holiday season, but didn’t have to use deep discounts as it was able to keep its inventory levels in line with demand. Kohl’s, based in Menomonee Falls, Wis., also capitalized on exclusive brands like Dana Buchman, Simply Vera Vera Wang and LC by Lauren Conrad, and gained market share from the closings of competitors like Mervyn’s.

For the period ended Jan. 30, earnings rose 28 percent to $431 million, or $1.40 per share, from $336 million, or $1.10 per share, in the same period a year earlier.

Results beat analysts’ estimate of $1.37 per share, according to a Thomson Reuters survey.

Sales increased 9 percent to $5.68 billion from $5.23 billion, narrowly topping Wall Street’s forecast of $5.67 billion.

“Consumers continue to be financially strained and are looking for value and ways to make their dollars go further,” Chairman, President and CEO Kevin Mansell said in a statement.

Sales at stores open at least a year grew 4.5 percent during the quarter. The measure is a key indicator of retailer performance since it measures growth from existing stores rather than newly opened ones.

Full-year profit improved to $991 million, or $3.23 per share, from $885 million, or $2.89 per share, in the prior year.

Sales rose 5 percent to $17.18 billion from $16.39 billion in 2009, with sales at stores open at least a year up 0.4 percent.

Kohl’s expects fiscal 2010 earnings of $3.40 to $3.63 per share. Analysts predict income of $3.63 per share.

The retailer anticipates profit of 48 cents to 52 cents per share for the first quarter. Wall Street projects profit of 54 cents per share.

Kohl’s said its outlooks assume sales growth of 4 percent to 6 percent and an increase of 1 percent to 3 percent for sales at stores open at least a year.

Kohl’s had 1,058 stores in 49 states at year’s end.