Kohl’s Corp. is giving back to shareholders.
This story first appeared in the February 25, 2011 issue of WWD. Subscribe Today.
The Menomonee Falls, Wis.-based chain, which posted a 14.4 percent rise in fourth-quarter profits and was generally bullish on 2011 despite rising price pressures, said it would pay its first-ever quarterly dividend to common shareholders next month.
The 25-cent dividend will be paid on March 30 to shareholders of record as of March 9. The company’s board also increased the firm’s share buyback program by $2.6 billion to $3.5 billion.
The dividend and increased buyback plan are a show of financial strength during a worrisome time for apparel retailers facing skyrocketing cotton prices and other supply chain woes. Kohl’s shares rose $1.78, or 3.4 percent, to $53.80 in Thursday trading.
So far, Kohl’s has held its own. Fourth-quarter earnings increased to $493 million, or $1.66 a diluted share, up from $431 million, or $1.40, a year earlier and in line with analysts’ expectations. Sales for the quarter ended Jan. 29 rose 6.3 percent to $6.04 billion from $5.68 billion on a 4.3 percent comparable-store sales increase. Footwear and men’s were the standout performers.
For the year, the 1,089-door retailer saw a 12.4 percent rise in profits to $1.11 billion, or $3.65 a diluted share, on a 7.1 percent uptick in sales to $18.39 billion. E-commerce sales jumped more than 50 percent last year to $720 million. This year, Kohl’s plans to add about 40 stores and push profits to $4.05 to $4.25 a share.
About 48 percent of the firm’s sales last year came from private label and exclusive national brands, a percentage that’s only expected to rise with the introduction of Jennifer Lopez and Marc Anthony brands in all of the firm’s stores this fall.
“The combination of the two brands is the largest brand initiative in terms of scope and investment we will have ever made,” said Kevin Mansell, chairman, president and chief executive officer, on a conference call with analysts. “We continue to work on new brand ideas and do expect to have further news to share with you this spring on that front.”
Mansell is betting that exclusive offerings and better inventory management will help protect results from rising apparel prices. Gross margins, which last year increased 41 basis points to 38.2 percent, are projected be flat to up 20 basis points this year.