Kohl’s Narrows, Lowers Guidance after Q3 Earnings

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Kohl’s Corp. (NYSE: KSS) reported third-quarter 2012 earnings this morning. For the quarter, the department store chain posted diluted earnings per share (EPS) of $0.91 on revenues of $4.5 billion. In the same period a year ago, the company reported EPS of $0.80 on revenues of $4.4 billion. Third-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.88 and $4.47 billion in revenues.

For the quarter, which ended in October, Kohl’s reported a same-store sales increase of 1.1%.

The company’s chairman said:

Our sales performance in the third quarter was consistent with our expectations, while our gross margin results were better than expected. Thanks to our dedicated teams, expenses were again well-managed. We have made noticeable investments in Holiday inventory — both in depth and content — and the in-store experience.

Kohl’s narrowed its full-year EPS range from an earlier estimate of $4.50 to $4.65 to a new range of $4.52 to $4.60. The current consensus estimate for full-year EPS is $4.62. For the company’s fourth quarter, the EPS guidance is $2.00 to $2.08, compared with the current consensus EPS estimate of $2.16.

In our early look at retail earnings, the estimate for Kohl’s earnings growth in the third quarter was 8.8%. As it turned out, the chain’s net income grew just 1.9% year-over-year. Combined with the narrower and lower guidance, Kohl’s is going to face the music today.

The company’s shares are down about 2.5% in premarket trading this morning, at $53.10 in a 52-week range of $42.72 to $56.66. The consensus target price for the shares was around $58.10 before today’s report.

Paul Ausick

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