Kohl's sees 2Q profits jump 34%

Don Hogsett, Staff Staff, August 27, 2001

MENOMONEE FALLS, WI — Still defying the laws of gravity and flying higher than the space station, second-quarter profits at rocket-hot Kohl's Corp. shot up by 34.6 percent, to $86.5 million from $64.3 million.

The heartland retailer leveraged stronger sales, wider margins and lower costs — all in the midst of a widespread retail slowdown — into a long-running winning streak of continued explosive growth.

Overall sales at Kohl's grew by 20.7 percent, to $1.5 billion from $1.3 billion the prior year. Crucially, same-store sales improved by 5.4 percent.

While other retailers are reporting gross margin erosion under unrelenting markdown pressure, Kohl's continues to bulk up its margins, which expanded by 50 basis points, to 35.4 percent from 34.9 percent a year ago. At the same time, the retailer continues to hack away at costs, leveraging stronger sales into an improved expense ratio, down by 20 basis points, to 22.7 percent from 22.9 percent a year ago.

At the same time, inventories remain under control, growing by 15.9 percent, to $1.2 billion, behind the 20.7 percent increase in sales.

Through the first six months of the year, Kohl's opened 34 new stores, entering the Atlanta and Fayetteville/Ft. Smith, AR, markets. Over the back half, the retailer plans to open another 28 stores, bringing the total for the year to 62.

Next year, the chain plans to pick up the pace, opening 70 new stores, including 35 to 40 in the first quarter. For the first time, the company will enter the Boston market, and at the same time beef up its presence in Texas with a major entry into Houston.

Kohl's Corp.

Qtr. 8/4 (x000) 2001 2000 % CHG
Sales $1,515,750 $1,255,360 20.7
Oper. income (EBIT) 152,350 116,474 30.8
Net income 86,513 64,290 34.6
Per share (diluted) 0.25 0.19 31.6
Average gross margin 35.4% 34.9%
SG&A expenses 22.7% 22.9%
Six months
Sales 3,004,083 2,484,026 20.9
Oper. income (EBIT) 284,860 212,690 33.9
Net income 161,624 116,908 38.2
Per share (diluted) 0.47 0.35 34.3
Average gross margin 35.2% 34.8%
SG&A expenses 22.7% 22.9%

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