Kohl's 2Q Gets Boost from Home
September 3, 2010,
MENOMONEE FALLS, WIS. - The home business at Kohl's enjoyed several gains during the second quarter, as the some of the mid-tier department store's private brands experienced double-digit sales increases and the overall category saw comps bump up as well.
The overall home business, along with women's and accessories, reported comp sales increases in the low- to mid-single range for both the quarter and year to date.
But more notably, sales increased by 20% for Kohl's three largest private brands combined - Croft & Barrow, Sonoma and Apt. 9, of which the latter two's mix includes soft home product offerings. And among the retailer's exclusive brands, Food Network and Simply Vera Vera Wang as well as Elle and Fila Sport reported a 30% total sales increase.
Kohl's total private and exclusive brands penetration increased more than 300 basis points to reach 49.1% of total sales for quarter.
Kohl's overall second quarter and year-to-date results also gave the retailer reason to be pleased.
For the second quarter, ended July 31, net sales grew by 7.7% to $4.1 billion versus last year's $3.8 billion, and comparable store sales increased 4.6%.
Net income rose 13.5% to $260 million, or 84 cents per share, compared with $229 million, or 75 cents per diluted share, a year ago.
Year to date, net sales increased 9.3% to $8.1 billion from $7.4 billion a year ago. Comparable store sales increased 5.9% for the same period.
Net income increased 25% to $459 million, or $1.48 per share, compared to $368 million, or $1.20 per share, for the first six months of 2009.
"We continue to gain market share as reflected in our performance in both comparable and total sales growth. This sales performance, along with strong inventory management, allowed us to continue to increase our gross margin rate," said Kevin Mansell, chairman, president and ceo, during the company's quarterly conference call.
E-commerce was another strong contributer in the quarter, sales leaping approximately 50% during both the quarter and the fi rst six months. It also contributed approximately 100 basis points to total comp sales in both periods.
"We think this performance supports the decision we made to make major new capital and infrastructure investments in this business," Mansell said.
Kohl's offered its updated guidance for the back half of this year.
For the third quarter, the company expects total sales to increase between 4.5% and 6.5%; comparable store sales to increase 2% to 4%; and gross margin as a percent of sales to increase 20 to 40 basis points over last year.
"For the third quarter, we expect August to be below the quarter, September to be with the quarter and October to be above the quarter," Mansell offered.
Kohl's expectations for the fourth quarter include a total sales increase between 4.5% and 6.5%, comparable store sales to increase from 2% to 4%, and gross margin as a percent of sales to increase 20 to 40 basis points over last year.
The company's updated guidance for fiscal 2010 is $3.57 to $3.70 per diluted share. In other company news, Kohl's reported during its quarterly call that it has forged a new credit card agreement in partnership is with Capital One.