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Kohl's Posts Powerful Gains

Fueled by rising sales, beefed up margins and tighter inventory controls, fourth-quarter profits at Kohl's Corp. soared up 29.3%, to $484.6 million from $374.9 million during the all-important Christmas quarter.

Sales jumped 16.7%, to $5.4 billion from $4.7 billion, boosted by new store openings. Same-store sales climbed 4.1% during the quarter, up 5.9% for the year.

Driving the profit growth, in addition to rising sales, the retailer strengthened average gross margin by 140 basis points, or 1.4 percentage points, to 35.3% from 33.9% during the same period a year ago. Costs were held in check, rising as a percentage of sales by just 30 basis points, or three-tenths of a percentage point, to 18.9% from 18.6%.

Under careful control, inventories grew slower than sales, rising 15.7%, vs. the 16.7% sales growth.

In another lift to the bottom line, the retailer slashed its interest costs by 46.8% during the quarter, to $10.0 million from $18.8 million a year ago, generating a cash savings of $8.8 million. Full-year savings totaled $30.4 million.

Kohl's Corp.

Qtr. 2/3 (x000) 2006 2005 % change
Sales $5,430,800 $4,615,900 16.7
Oper. Income (EBIT) 787,800 621,600 26.7
Net income 484,600 374,900 29.3
Per share (diluted) 1.48 1.08 37.0
Average gross margin 35.3% 33.9%
SG&A expenses 18.9% 18.6%
12 months
Sales 15,544,200 13,402,200 16.0
Oper. Income (EBIT) 1,814,800 1,416,200 28.1
Net income 1,109,700 842,000 31.7
Per share (diluted) 3.31 2.43 36.2
Average gross margin 36.4% 35.5%
SG&A expenses 21.9% 22.1%


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