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NEW YORK — Kohl's Corp. reports earnings for the fiscal second quarter on Thursday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Kohl's and other department store chains face a big challenge as shoppers limit spending and worry about job security, tight credit and falling home prices. And while overall business is starting to improve amid signs of a stabilizing economy, business is still weak for department stores.
Analysts believe Kohl's, which has developed strong exclusive brands and been cutting its costs, is benefiting from the liquidations of competitors like Mervyns LLC. Kohl's is taking advantage of this shrinking landscape by opening 11 new stores in April — 19 in all this spring, and 55 for the year — mostly in former Mervyns locations. Kohl's and Los Angeles-based retailer Forever 21 jointly acquired 46 Mervyns locations for about $6.25 million.
Kohl's said last week that its July same-store sales rose 0.4 percent, beating analyst predictions for a 3.2 percent drop from July last year. Same-store sales, or sales at stores open at least a year, are considered a key indicator of a retailer's health. Based on the July results, Kohl's raised its second-quarter profit outlook.
BY THE NUMBERS: Kohl's now expects to earn between 73 cents and 74 cents per share for the second quarter, up from an earlier forecast of 56 cents to 64 cents per share. Analysts surveyed by Thomson Reuters on average project a profit of 73 cents per share for the second quarter on revenue of $3.78 billion. Kohl's posted profit of $236 million, or 77 cents per share, on revenue of $3.7 billion during the second quarter of 2008.
ANALYST TAKE: Wayne Hood, a retail analyst at BMO Capital Markets, noted that Kohl's upgraded outlook reflects continued expense controls and a strong mix of store-label and exclusive brands. He said its assortment and pricing could lead to a "strong back-to-school season."
WHAT'S AHEAD: Analysts will listen for information on Kohl's back-to-school sales and whether shoppers seem to be increasing their spending on apparel and other discretionary items. They will also want to know Kohl's plans for the holiday season.
STOCK PERFORMANCE: Kohl's shares rose 14 percent during the quarter, which ended Aug. 2, and they're up 45 percent from the beginning of the year. The stock has rebounded to roughly where it was a year ago, closing at $52.53 on Monday, near the high end of its 52-week range of $56 to $24.28.
