Kohl’s net income rises on better revenue; company trims top end of yearly outlook

Kohl’s 2Q net income rises, but outlook less rosy

NEW YORK — Kohl’s Corp. second-quarter net income rose nearly 14 percent as demand improved for its fashions and the department store chain kept a tight lid on inventory.

But Kohl’s trimmed the top end of its yearly outlook because of rising costs and expectations for slowing sales growth in the second half of the year, which includes the critical holiday selling season. Shares fell $1.76, or 3.7 percent, to $46.02 in morning trading.

Kohl’s also is switching the bank running its store-label credit card business to Capital One N.A. from Chase Bank USA, according to a regulatory filing Thursday.

Kohl’s says net income rose to percent $260 million, or 84 cents per share. That compares with $229 million, or 75 cents per share, last year. Analysts expected 82 cents per share.

Revenue rose 8 percent to $4.1 billion. That nearly matched analysts expectations.

Revenue in stores open at least a year rose 5.9 percent.

The company now expects yearly net income of $3.57 to $3.70 per share. Earlier guidance was $3.57 to $3.75 per share. Analysts surveyed by Thomson Reuters expect $3.76 per share.

In a statement released Thursday, Kevin Mansell, Kohl’s chairman, president and CEO, said Kohl’s continues to gain market share as reflected by higher revenue and its revenue at stores open at least a year.

When Kohl’s reported July revenue figures last week, Mansell said that shoppers remained frugal. While more people bought things, the number and prices of what they bought fell slightly, “indicating that our customer remains cautious,” he said in a statement.

For the third quarter, Kohl’s expects total sales to increase between 4.5 percent and 6.5 percent and revenue at stores opened at least a year to rise 2 percent to 4 percent. It also expects selling, general and administrative expenses to increase between 10 and 11 percent. This would result in earnings per share of 57 cents to 63 cents for the third quarter.

For the fourth quarter, Kohl’s expects total sales to increase between 4.5 and 6.5 percent, and revenue at stores opened at least a year to rise 2 percent to 4 percent. This would result in earnings per share of $1.51 to $1.59 per share.

For the full year, Kohl’s expects earnings of $3.57 to $3.70 per share. Analysts surveyed by Thomson Reuters expects 74 cents per share in the third quarter and $1.57 per share in the fourth quarter.