Discount department store chain Kohl's (NYSE: KSS) racked up impressive profits on sales increases in its fourth quarter. More customers shopped at Kohl's, though each one on average spent a little less. Earnings and sales figures for the fiscal year were up as well. The stock shot up over 5% on news of the positive earnings report.
IN PICTURES: 10 Tips For Choosing An Online Broker
Kohl's Latest Numbers
Kohl's earned $1.40 per share, or $431 million in net income, compared to $1.10, or $336 last year's quarter. Sales increased from $5.23 billion to $5.68 billion. The company relied on its exclusive value-priced brands such as Simply Vera Wang and Dana Buchman labels. While Kohl's went the route of promotions, they didn't rely on deep discounts to generate sales. The company predicted a continued soft market for retail department store operators.
Despite the recent report on falling levels in consumer confidence, retail numbers have been getting better. Perennial laggard Sears Holdings (Nasdaq: SHLD), owner of Sears and KMart stores, had its best earnings report in a long time. KMart performance played an integral role, experiencing a 1.7% increase in revenue as Sears sales continued to decline, though less than previously. Macy's (NYSE: M), led by its new My Macy's program with emphasis on a local approach for stores, posted a fourth-quarter profit despite a slight decline in sales.
Retail appears to be slowly strengthening across the board. Apparel retailer the Limited (NYSE: LTD) beat earnings estimates, with $1.0l earnings per share against the expected 98 cents. Sales were up 2%. A recent analyst's note for Nike (NYSE:NKE) expects the athletic footwear retailer to reverse its slight decline in sales, gross margins, and grow sales and earnings in the near future.
Although the earnings report was impressive for Kohl's, it should be noted that the company's guidance was below analysts' previous views. EPS at 48 to 52 for the first quarter is under the 54 cent figure expected. For the full year, Kohl's is calling for same store sales growth of 1-3 %. This is on the heels of full year growth of same store sales of 5% this year, with a 4.5% mark in the last quarter. Kohl's and other retailers will continue to be challenged by the sluggish economy, but Kohl's executed well this last year.
While Kohl's and many of the other retailers across the board continue to profit despite a tough environment for increasing top-line revenue, expect Kohl's to continue to perform well in the year ahead. The stock price, which had come down from its 52-week high, has been resurgent, so price-conscious investors will want to wait for a pull back. Kohl's, like many other retailers, is showing signs of growing strength, and its business may take off when the economy finally gets going. Kohl's is a terrific company for the long-term, and with Kohl's continued show of strength, even in a tough economy, investors will want to be in on the stock at the best price they can get. (Find out what to do when the sun sets on a burgeoning market. For more information, read Recession-Proof Your Portfolio and Industries That Thrive On Recession.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!