Earnings Slip at Kohls, Home Positive

Kohl's reported a lower profit for the second quarter, but raised its earnings guidance for the full year, citing better inventory controls and improved margins.

Home was one of three merchandise segments showing positive comps during the quarter, along with accessories and footwear, president and ceo Kevin Mansell said during last week's quarterly conference call. Within home, small electrics, bedding and food prep were the best performers.

The elimination of Linens 'n Things from the market probably helped all home furnishings merchants, he said, adding: “It seems like to me we're benefiting a little bit more.”

He described home as “an area of focus” in terms of inventory management, with an emphasis on basics.

“Home's a really a basics category, and that's a category we're supplying with inventory – and we're getting high rewards for that,” said Mansell.

Although average transactions fell 2.6% during the quarter, Kohl's 40% gross margin marked an improvement of almost 40 basis points.

For the quarter ended Aug. 1, net income fell 3% to $229 million, or 75 cents per share. Sales rose 2.2% to $3.8 billion, while comps declined 2.3%.

For the first half, profits dropped 5.4% to $368 million, or $1.20 per share. Sales were up 1.3% to $7.4 billion, with a 3.2% decline in comps.

Mansell predicted the second half would be a battle for market share just like the first half. “The consumer continues to face economic challenges and intends to shop less,” he added. While Kohl's believes it's positioned to gain share, “in the backdrop – always in the backdrop – is a weak consumer,” he said.

The company now expects fiscal year earnings per shre of $2.59 to $2.70. In May, it had set expectations for the year at $2.19 to $2.42 per share.

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HTT Cover October 2017

See the October 2017 issue of Home & Textiles Today. In this issue, we look at the Top 25 Online Retailers.  H&TT's exclusive annual ranking of the biggest online sellers of home textiles finds that while pure play etailers continue to fly, bricks & clicks are digging into omnichannel. See details!