Kohl’s net income rises in 1st quarter as revenue improves, raises full-year outlook

Kohl’s 1Q net income rises on higher revenue

NEW YORK — Department store operator Kohl’s Corp.’s first-quarter net income rose 45 percent as shoppers spent more at its stores, particularly for shoes and home goods. But the company’s CEO said that consumers’ buying remains below what it was before the Great Recession.

The retailer raised its full-year guidance, but even the higher forecast for the second quarter and full year were short of analysts’ expectations. Its shares fell $3.34, or 5.8 percent, to close at $53.81.

Kohl’s said its net income rose to $199 million, or 64 cents per share, in the three months ended May 1, up from $137 million, or 45 cents per share, a year ago.

Analysts surveyed by Thomson Reuters expected earnings of 62 cents per share, and typically exclude one-time items from their estimates.

Revenue rose 11 percent to $4.04 billion from $3.64 billion last year. Analysts expected revenue of $4 billion.

Revenue in stores open at least a year rose 7.4 percent in the quarter. The figure is considered a key measure of a retailer’s financial health.

All segments of business enjoyed gains, with footwear and home furnishings the strongest performers, CEO Kevin Mansell told investors during a conference call. The company’s store-label and exclusive brands, which now account for 47.2 percent of its business, fared well. Among its exclusive brands is Elle, which is expanding beyond clothing and accessories into home products under the label Elle Decor this fall.

“We’re off to a good start. We’ve gained significant market share nationwide,” said Mansell. But he told investors that the economy remains uncertain amid a high jobless rate.

During an interview with The Associated Press, Mansell said that sales of women’s clothing, among the hardest hit during the recession, are starting to improve, but spending is still well below what it was before the downturn.

Women customers are spending “a little more on fashion for themselves,” he said. “But customers are telling us they expect to spend less and spend only on what they need.”

Another issue is inflationary pressures, which are creeping up in shoes and home goods and could mean higher prices in certain cases at the chain for 2011, Mansell said. Retail prices at the store remain even with a year ago, and Kohl’s is trying to contain rising costs by shifting its sourcing to lower-cost regions such as Vietnam.

“The last thing we’re going to do is raise prices,” Mansell said.

For the second quarter, the company expects to earn 70 cents to 75 cents per share, while analysts expect 92 cents per share.

Kohl’s now expects $3.57 to $3.75 per share for the year. That is up from prior guidance of $3.40 to $3.63 per share. But analysts expect $3.77 per share.

The company expects revenue at stores open at least a year to rise between 2 and 4 percent in the current quarter and 3.5 and 5 percent for the year.

Kohl’s, based in Menomonee Falls, Wis., opened nine stores during the quarter, for a total of 1,067 stores in 49 states.

____

AP Retail Writer Mae Anderson in New York contributed to this report.