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Kohl's net income takes a hit, home a soft spot

Menomonee Falls, Wis. - The second quarter proved another challenging period for Kohl's, and its home business did little to ease the pain.

For the 13 weeks, ended July 28, the retailer's net income sank 20% to $240 million, or $1.00 per share, at mid-tier department store chain.

Sales dipped 1.0%, to $4.2 billion, and comparable store sales were down 2.7%.

By merchandise category, men's was slightly positive for the quarter, and both footwear and accessories were above the company average.

Although home was among the poorest performers, there were several categories that did relatively better than others, including bedding and sheets, bath and towels, and other domestics.

Year to date, net income declined 21.2% to $394 million, or $1.63 per share. Sales inched up 0.4% to $8.4 billion, but comparable store sales decreased 1.3%

Kevin Mansell, chairman, president and ceo, called the company's quarterly sales performance "disappointing." But, he said, the company has improved inventory levels for the fall season "and our sales improved considerably in July as units were received."

The 1,134-unit chain has adopted a more aggressive pricing plan, increased opening price-point offerings, re-aligned its inventories by category, reduced new store openings count, and streamlined its in-house business model, Mansell said during the conference call this morning.

"The customer is pressured, so it is very, very, important [for us] to be powerful in good, which is mostly our private brand, and the better, which is mostly our...exclusive brand," Mansell said. "There is a lot more focus around those price points to drive out business."

Kohl's also lowered is fiscal year guidance and now expects EPS of $4.50 to $4.65 versus its previous guidance of $4.75.

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