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Kohl's thrives with 3Q sales, profits climbing

MENOMONEE FALLS, WI -Sailing through the third quarter as if it had never heard of a retail slowdown, heartland retailer Kohl's Corp. pushed third-quarter profits up by 45 percent, as it drove sales higher by almost a third.

With sales climbing higher, costs coming down and margins holding steady in the midst of a sluggish retail environment that has pressured earnings at most other big retailers, Kohl's said its third-quarter profits jumped up by 44.8 percent, to $76.7 million from $53.0 million last year. The strong performance marked a fourth straight year of more than 30 percent earnings growth.

Rolling out new units at a rapid pace and breaking new ground in Northeastern states, Kohl's pushed sales higher by almost a third, up 31.4 percent, to $1.4 billion from $1.1 billion last year. And it wasn't just bricks and mortar driving the top-line growth-same-store sales raced ahead by 9.4 percent.

Larry Montgomery, ceo, said, "This performance reflects across-the-board strength in our operations, including stronger sales at both new and existing stores, gross margin improvements and effective expense controls."

Leveraging the strong sales gains, Kohl's pared down expenses as a percentage of sales by 40 basis points, to 22.0 percent from 22.4 percent the previous year. And while other stores were promoting heavily, clearing off their shelves and putting margins under pressure, Kohl's managed to tweak its margins up by 10 basis points, to 34.3 percent from 34.2 percent a year ago.

Aggressively rolling out new units and opening up new trading areas, Kohl's opened 22 new stores during the quarter, including three in the Chicago market; four in Denver; a store in Flint, MI; three on Long Island, NY; three in Tulsa, OK; and others in Dallas/Fort Worth; Harrisburg, PA; Pittsburgh; Detroit; St. Louis; Philadelphia; Winston-Salem, NC; and Keenah, WI.

Looking ahead to the new year, Kohl's said it plans to open 55 to 60 new stores, including 34 during the first quarter of the year, breaking into the Atlanta market with 15 new stores. Further penetrating the Northeastern market, Kohl's plans to open four units in the Hartford/New Haven, CT, market. It will also enter Arkansas with three stores, and open additional stores in existing Midwestern and mid-Atlantic markets.

KOHL'S CORP.


Qtr. 10/28 (x000) 2000 1999 %CHG

Sales

$1,444,929

$1,099,852

31.4

Oper. income (EBIT)

135,978

94,515

43.9

Net income

76,746

53,014

44.8

Per share (diluted)

0.23

0.16

43.8

Average gross margin

34.3%

34.2%

-

SG & A expenses

22.0%

22.4%

-

NINE MONTHS

2000

1999

%CHG

Sales

3,928,955

2,949,611

33.2

Oper. income (EBIT)

344,571

244,068

41.2

Net income

193,654

137,566

40.8

Per share (diluted)

0.57

0.41

39.0

Average gross margin

34.6%

34.4%

-

SG & A expenses

22.7%

23.1%

-


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