Kohl's Down on Earnings Slip

Kohl's Corp., a mid-priced retailer of apparel and home goods, and the fourth-largest U.S. department-store company, on Thursday reported a 14% drop in Q3 profit as sales fell short of analysts' estimates, and cut its earnings forecast for the holiday selling season and full-year. Kohl's shares were down 2.9% to $47.50 in extended trading from their $48.92 close. Net income fell to $194 million ($0.61/share), down from $224.5 million ($0.68/share) for third-quarter 2006, but just ahead of the $0.60/share analysts expected. Total sales rose about 5% to $3.8 billion, below analyst estimates of sales of $3.9 billion. Sales at stores open at least a year fell 2.6%. Kohl's said it now expects Q4 profit of $1.45-$1.51 per share, assuming same-store sales that are flat to down 2%. In August, the retailer had forecast Q4 EPS of $1.63-$1.69. Analysts expected EPS of $1.58 for Q4 and $3.64 for the year. President Kevin Mansell said on a conference call with analysts that the retailer was being "conservative" on its outlook for the quarter and the first part of next year (full transcript). "People are still struggling to find a bottom for these earnings," said Lauri Brunner, an analyst at Thrivent Investment Management. "We see a lot of unraveling in the fourth-quarter earnings."

Sources: Press release, Reuters, Wall Street Journal, Bloomberg, MarketWatch
Commentary: Kohl's Looks Most Attractive Among Discount Retailers • Macy's Pullback Means Opportunity
Stocks to watch: KSS. Competitors: M, JCP, SHLD

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