Same-store sales at Kohl’s Corporation (KSS) went up 7.5% in the five-week period ended July 2, 2011 compared with an increase of 5.9% posted in the year-ago period. June comparable store sales met management’s expectations.
Midwest, Mid-Atlantic and Northeast regions reported especially strong comparable store sales fuelled by seasonal changes in those regions. All lines of business reported positive comparable store sales increases.
Total retail sales in June 2011 climbed up by 9.2% to $1,753.0 million from $1,605.0 million in the year ago period.
Retail sales of fiscal 2011 stood at $7,287.0 million, which was 4.4% higher than $6,978.0 million from the year ago period. Same-store sales for the period edged up 2.6% compared to 6.2% in the previous year. July 1 sales saw the highest single-day sales for the year.
Target Corporation (TGT), an arch rival of Kohl’s, posted a same-store sales increase of 4.5% in June while net sales increased 5.7% to $6.26 billion from $5.65 billion in the year-ago period.
Store Update
As of July 2, 2011, Kohl’s Corporation operates 1,097 stores in 49 states, compared to 1,067 stores at the same time last year.
Guidance
In the last earnings release management said that it expects diluted earnings per share, to be in the range of 68 cents to 73 cents for the first quarter of fiscal year 2011. Kohl’s expects total earnings per diluted share for 2011 to be in the range of $4.05 to $4.25. The Zacks Consensus Estimate is currently pegged at $1.00 with full-year estimate of $4.37.
The company anticipates total sales to advance in the range of 4.0%–6.0% both in the first quarter and fiscal 2011.
The company projects same store sales to spike 2%–4% in the first quarter and full year 2011 as well.
Conclusion
Kohl’s has had a consistent merchandise mix over the past three years. In addition, the company’s pricing strategy and overall profitability culture is focused on maintaining a low-cost structure.
A strong balance sheet coupled with strong cash balances and attractive dividend yields makes the stock attractive. However, the company’s failure to predict constantly changing consumer tastes, preferences, spending patterns and other lifestyle decisions could create inventory imbalances and adversely affect its performance.
Kohl’s holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Currently, we maintain a long term Neutral recommendation on the stock.
Kohl’s Corporation. runs family-focused, value-oriented specialty department stores offering moderately priced, exclusive and national brand apparel, shoes, accessories, beauty and home products in an exciting shopping environment.
KOHLS CORP (KSS): Free Stock Analysis Report
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