FUELED BY WOMEN’S SALES, KOHL’S PROFITS LEAP 28.2%
Byline: Thomas J. Ryan
NEW YORK — Driven by robust gains in women’s apparel, profits at Kohl’s Corp. climbed 28.2 percent in the fourth quarter ended Jan. 29, making the company one of the strongest performers among department stores this past holiday.
The Menomonee Falls, Wis.-based firm also announced plans to enter Atlanta in 2001, which follows its big push into the New York metropolitan region this month.
In the quarter ended Jan. 29, earnings rose to $120.6 million, or 72 cents a share, from $94.1 million, or 58 cents, a year ago. Results easily exceeded analysts consensus estimates of 69 cents. Sales moved ahead 24.7 percent to $1.61 billion from $1.29 billion, with same-store sales ahead 7.1 percent. Women’s apparel, women’s accessories and home paced sales.
On a conference call, Lawrence Montgomery, vice chairman and chief executive, said women’s apparel has been vibrant for the past 2 1/2 years as a result of increased inventory investments and better positioning within the stores. Also fueling the gains was strength in Villager, an exclusive brand made by Liz Claiborne, and Sag Harbor, as well as the addition of Norton McNaughton last year. A focus on key items particularly drove the misses’ area.
“We have done an enormous amount of volume with key knit and bottoms programs,” said Montgomery. Bath & Body, which was introduced last year, has done particularly well among teenagers.
Kohl’s sees a major plus from the addition this spring of Columbia Sportswear and Arrow. “We expect both of them to be in our top 20 brands in our first year out,” said Kevin Mansell, president.
Mansell said Kohl’s had a “tremendous grand opening” with the informal launch last weekend of seven stores in Long Island and 11 in New Jersey.
“Early comments from customers have been favorable,” said Montgomery. “I don’t think people understood the concept, but our marketing got a lot of people out. If you get out there this weekend, you’ll see a lot of people out there that you haven’t seen in a while.”
Asked about any response from competition, Montgomery quipped: “We haven’t seen anything yet, but the week’s not over.”
Inventories were up 28.7 percent to $794 million at yearend in support of the Northeast push. In April, eight stores will open in Connecticut, six in the New York region and one in Baltimore.
“I think the company is going to do extremely well in New York,” said Bob Buchanan, an analyst at A.G. Edwards. “It’s a tough place for business, but it’s not a part of a country known for its store standards. So, Kohl’s well stocked and brightly lit stores should do very well.”
The firm is also opening four additional stores this spring in the Dallas-Fort Worth region. This fall, about 21 stores, primarily in the Midwest and Mid-Atlantic markets, will open. Sixty stores will open this year overall. For 2001, 55 to 60 stores will bow, including the company’s first in Atlanta. In 1999, Kohl’s opened 46 stores, marking its entry into Denver, Dallas and St. Louis. The firm ended the year with 259 units in operation.
In the full year, net income jumped 34.3 percent to $258.1 million, or $1.55 a share, from $192.3 million, or $1.18, a year ago. Sales moved ahead 23.8 percent to $4.6 billion from $3.7 billion.