NEW YORK — Slumping women’s apparel sales and higher costs from a bevy of store openings pushed third-quarter results down for Kohl’s Corp.
This story first appeared in the November 14, 2003 issue of WWD. Subscribe Today.
For the three months ended Nov. 1, the Menomonee Falls, Wis.-based chain saw earnings fall 9.1 percent to $121.2 million, or 35 cents a diluted share, in line with Wall Street’s consensus estimate. Comparatively, the company reported earnings of $133.4 million, or 39 cents, last year.
Sales for the period advanced 11.7 percent to $2.39 billion compared with $2.14 billion last year. Uncharacteristically, comparable-store sales in the quarter were down, dropping 1.3 percent.
Arlene Meier, chief operating officer, said during the company conference call, “The decline in margin rate for the quarter was primarily attributable to women’s apparel. We took deeper markdowns in the quarter to make sure we were appropriately positioned for the holiday season.”
Kevin Mansell, president, pointed to women’s sportswear and inventory control issues as key factors adversely affecting overall women’s apparel performance. “Women’s apparel remains a difficult category,” said Mansell during the call. “We expect margins could still be under some pressure for the fourth quarter.”
Seasonal apparel sales were “down significantly lower than the comp,” said Mansell, primarily due to an unseasonably warm October.
“I hate to say ‘weather,’” said Mansell of the frequent alibi for soft sales, “but frankly, that’s what it comes down to.”
Sales got a boost from the opening of an additional 50 stores during the quarter, bringing the number of stores in operation to 542. Comparatively, the company had 457 stores in operation during the same period last year.
However, as Meier pointed out on the call, costs associated with new stores weighed heavily on results. According to Meier, average preopening costs for each store were $480,000. Ninety percent of those costs were incurred during the third quarter.
For the nine months to date earnings slid 5.5 percent to $344.3 million, or $1.00 a share, against $364.4 million, or $1.06 a share, last year.
Sales were up 13.2 percent to $6.72 billion from $5.94 billion last year but dropped 1 percent on a comp basis.
For the fourth quarter, the company expects to report earnings per share of between 85 cents and 95 cents.