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Kohl's (KSS)
Kohl's Sees Profit Fall, But Beats Analysts' Expectations
The Kohl's Corporation (KSS: Charts, News, Offers) managed to beat out Wall Street's first quarter predictions with a less than expected decline in first quarter profit. Kohl's reported that its first quarter net income fell 10% to $137 million from $153 million a year ago. Most analysts had the department store outlet slotted for earnings of 44 cents a share, but Kohl's edged out those forecasts with 45 cents a share. How was the fourth-largest U.S. department store able to beat industry predictions? What does this bitter-sweet news mean for Kohl's future?
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| Stock Analysis |
Although profits dropped, Kohl's saw its sales increase 0.4% to $3.6 billion. This surge in sales helped buoy Kohl's falling first quarter profit. Kevin Mansell, Kohl's chief executive, also mentioned that the clothing outlet managed to gain market share, which is reflected in its rise in sales. However, Kohl's attributes a large portion of its better than expected first quarter performance to expense management. The Kohl's Corporation made a strong effort to eliminate expenses while improving the in-store experience for shoppers. In addition, Kohl's accurately ratcheted down inventory levels to adjust for falling demand. The company's diligent inventory forecasting helped reduce the number of markdown sales necessary to move lingering merchandise. The Kohl's Corporation also released its performance predictions for the remainder of the year.
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Kohl's seems to be relatively optimistic about its first quarter performance. Although the clothing store outlet is keeping a realistic outlook on the future, it is excited about the positive turnaround in sales. Kohl's anticipates its second quarter net income to be between 56 and 64 cents a share, a considerable increase from the first quarter's 45 cents a share performance. The department store outlet also adjusted its full year prediction to be between $2.19 and $2.42 a share. It had previously anticipated this range to be around $2 to $2.30 a share. As most companies scale back performance forecasts, Kohl's is moving in the opposite direction.
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Overall, Kohl's had mixed results with its first quarter performance, but the department store is focused on the future. The Kohl's Corporation wants to build off the positive momentum that its market share gained last quarter. In addition, Kohl's is hoping that it can continue to improve profit margins through accurate inventory forecasting. However, the fourth-largest U.S. department store is well aware of the challenges associated with its performance goals, especially in today's economic climate. Will Kohl's be able to find the right outfit to dress for success in the months to come?
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