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.

Retail Rising
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.

Kohl's Challenges
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.

Kohl's Prospects
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!

Related Articles
  1. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
  2. Investing News

    Bank Stocks: Time to Buy or Avoid? (WFC, JPM, C)

    Bank stocks have been pounded. Is this the right time to buy or should they be avoided?
  3. Stock Analysis

    Why the Bullish Are Turning Bearish

    Banks are reducing their targets for the S&P 500 for 2016. Here's why.
  4. Stock Analysis

    How to Find Quality Stocks Amid the Wreckage

    Finding companies with good earnings and hitting on all cylinders in this environment, although possible, is not easy.
  5. Investing News

    What You Can Learn from Carl Icahn's Mistakes

    Carl Icahn has been a stellar performer in the investment world for decades, but following his lead these days could be dangerous.
  6. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  7. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  8. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  9. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  10. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
Trading Center