Reed for Kohl’s

Kohl’s Corporation stock declined 6 percent this morning to $38.70 after missing analyst estimates for both earnings and sales for the first quarter.

Net income for the quarter fell to $58 million, or 31 cents a diluted share, down from $127 million, or 63 cents, a year ago. The FactSet estimate was for earnings of 37 cents a share.

Sales for the three months ending April 30 decreased to $3.9 billion from $4.1 billion a year earlier. The FactSet estimate was for $4.1 billion. February started out well for Kohl’s, but then dropped off dramatically after that month.

“First quarter sales were challenging,” said chief executive officer and chairman Kevin Mansell,  “Despite the sales environment, we were able to manage our gross margin and inventory levels consistent with our expectations as we took the markdowns necessary to clear excess inventory.”

Comparable-store sales fell 3.9 percent versus last year’s increase of 1.4 percent. The Northeast and the Midwest were strongest, while the West and South central were more difficult regions.

The company said that the Reed handbags by Reed Krakoff were off to a very good start and that Nike continued to perform well. Men’s and women’s were the strongest categories, with the home department being the weakest.

Gross margins fell to 35.5 percent from last year’s 36.9 percent.

The company said that store payroll dollars were slightly higher than last year and that it tried to pull back on staffing to align with sales.

Mansell did say he believed sales trends would improve in the second quarter. For the overall year, the guidance for the top line was anywhere between negative 0.5 percent to up 1 percent.

“It will get warm. We have shorts to sell and we are in a good inventory position. I think at some point people will need those clothes and will come and buy them,” said Mansell.

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