Kohl's Corp. is the latest casualty of the troubled economy.
The Menomonee Falls, Wis.-based retailer said fourth-quarter profits during the quarter fell 15 percent to $411.7 million, or $1.31 a diluted share, which was a penny better than Wall Street analysts predicted. This compared with $484.6 million, or $1.48, a year earlier, when the quarter included one additional week.
Sales for the three months ended Feb. 2 inched up 0.7 percent to $5.49 billion from $5.45 billion. Comparable-store sales fell 4 percent.
The gross margin rate was squeezed to 34.3 percent from 35.4 percent a year earlier — due to heavier markdowns.
Retailers from J.C. Penney and Target to Sears have all pinned narrower fourth-quarter margins on softer consumer spending as high gas prices, shocks on Wall Street and concerns over job prospects take a toll.
For the full year, Kohl's earnings dipped 2.2 percent to $1.08 billion, or $3.39 a diluted share, as sales rose 5.6 percent to $16.47 billion. The gross margin rate expanded slightly to 36.5 percent from 36.4 percent a year earlier.
"Despite a challenging year, which saw deep discounts across the industry, our [annual] gross margin increased over the prior year as a result of improved inventory management and increased penetration from our private and exclusive brands," said Larry Montgomery, chairman and chief executive officer.
For both the fourth quarter and the full year, the accessories department led the store's results with comp-sale increases, while men's apparel and footwear also beat the firm's overall results, leaving the women's apparel and home areas lagging.
President Kevin Mansell told Wall Street on a conference call that the firm's new brands are resonating with customers.
"We saw very broad acceptance of all three of our new brand introductions in 2007 — Simply Vera Vera Wang, Elle and Food Network," said Mansell. "They increased our share of wallet with our existing customer and based on results in our credit card portfolio brought in a new customer as well."
Mansell added the firm's exclusive and private brand business was expanding. Still, like most of the retail sector, the company is preparing for a bit of a slog this year."We expect 2008 to be a challenging year from a macroeconomic perspective," said Montgomery. "We are planning conservatively in our sales expectations, inventory levels and expenses."
Kohl's is anticipating earnings of 50 to 54 cents a diluted share for the current quarter and $3.15 to $3.50 for all of 2008. Comparable-store sales are expected to be flat to down 3 percent for the year.
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