After the strong November comparable sales, same-store sales at Kohl’s Corporation (KSS”>KSS) went down 0.1% in the five-week period ended December 31, 2011 compared with an increase of 3.9% in the year-ago period. However, on a year-to-date basis, same-store sales increased 0.5% in December 2011.
Comparable sales were primarily affected by weak sales in cold-weather categories due to December’s mild weather. On the other hand, same-store sales at Kohl’s upscale competitor Saks Inc. (SKS”>SKS) went up 5.8% for the month of December.
Total sales of Kohl’s jumped 1.7% to $3.25 billion for the five-week period ended December 31, 2011 compared with an increase of 5.9% in the same period a year ago. Further on a year-to-date basis, total sales increased 2.3% to $17.96 billion, compared with $17.57 billion over the prior year period.
Sales went up owing to strong e-commerce business. Kohl’s also expects its e-commerce sales to reach $1 billion for fiscal 2011.
As a result of sluggish comparable sales, Kohl’s has lowered its earnings per share forecast to $1.70 to $1.73 for the fourth quarter, from its previous guidance of $1.93 to $2.04. The company has also reduced its fiscal 2011 outlook to $4.20 to $4.23 from $4.41 to $4.52, guided earlier.
The retailers generally profits from the holiday shopping season during the months of November and December. The weak holiday season during December has negatively impacted the comparable sales of December.
Nevertheless, Kohl’s has a strong balance sheet coupled with strong cash balances and attractive dividend yields. The company has also had a consistent merchandise mix over the past three years. In addition, the company’s pricing strategy and overall profitability attitude are focused on maintaining a low-cost structure.
Kohl’s also remains focused on the small store concept, which offers better real estate flexibility and provides a platform to open more stores faster.
Kohl’s, which operates 1,127 stores in 49 states, holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Currently, we maintain a long term Neutral recommendation on the stock.
KOHLS CORP (KSS): Free Stock Analysis Report
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