KSS boosts profit forecast on tie-ups, better inventory mgmt
May 22, 2018
May 22 (Reuters) - Kohl's Corp raised its annual earnings forecast on Tuesday, as the department store chain sells products more efficiently and benefits from tie-ups with other retailers.
More customers are also shopping at Kohl's, which has a lucrative deal with Amazon.com Inc. Kohl's stores sell Amazon electronics and accept returns from Amazon customers.
As part of other tie-ups, Kohl's has leased space to supermarket chain Aldi and improved the number of beauty products and sportswear sold in stores.
Kohl's shares were up earlier but reversed course and are now down about 4 percent. On a conference call, Kohl's said customer transactions were flat in the latest quarter, mainly from a slower start to the spring selling season because of cold weather in some part of the United States.
U.S. department store chains have reported a mixed set of results for the quarter. They have generally struggled in recent years as fewer shoppers visit malls and instead shop online.
Nordstrom Inc and J.C. Penney reported lower-than-expected comparable sales for the first quarter. Penney also blamed cold weather for downbeat results. Macy's raised its annual profit on higher customer spending.
Sales at Kohl's stores open for at least 12 months climbed 3.6 percent in the first quarter ended May 5, compared with the 2.7 percent increase expected by analysts on average, according to Thomson Reuters I/B/E/S.
Gross margin rose to 36.9 percent from 36.4 percent in the quarter and inventories fell 6.6 percent.
"A healthy consumer backdrop, and an incredibly favorable weather setup for retail from now until December, the outlook for Kohl's looks very attractive," Gordon Haskett analyst Chuck Grom said.
The company's net income rose 13.6 percent year-over-year to $75 million. Excluding one-time items, Kohl's earned 64 cents per share, topping analysts' estimates of 50 cents, according to Thomson Reuters I/B/E/S.
Revenue rose 3.5 percent to $4.21 billion and exceeded expectations of $3.95 billion. (Reporting by Aishwarya Venugopal in Bengaluru; Editing by Sai Sachin Ravikumar, Bernard Orr)