Jewellery's web blog

Department store retailer Kohl’s Corp. said earnings fell 12.3% in the recent quarter, but still beat analysts’ frank gehry on the strength of its inventory management and sales of higher-margin private label and exclusive brands.

Kohl’s also raised its earnings guidance for the full year on Thursday.

The Menomonee Falls-based chain store said net income fell to $236.0 million, or 77 cents a share, from $269.2 million, or 83 cents a year ago. The results beat the estimate of analysts by 4 cents a share.

Sales rose 3.8% for the three months ended Aug. 2, to $3.73 billion from $3.59 billion.

The company said it would pull back on store openings in 2009, planning about 50 new stores and 60 remodelings of existing stores. Chairman Larry Montgomery told analysts that the conservative plan allows Kohl’s to increase the number of new stores if attractive real estate becomes available after Christmas.

This year, Kohl’s will open 75 stores, including 47 this fall.

“I think it’s smart of them to cut back,” said Stephanie Hoff, an analyst for Edward Jones. Hoff said she tiffany bracelets pleased with Kohl’s results Thursday, and that the company was doing well compared to the competition.

On a comparable-store basis, Kohl’s sales were down 4.6% for the quarter. The accessories and men’s departments turned in the best performance for the quarter, particularly sterling silver jewelry and men’s socks, President Kevin Mansell said during a conference call with analysts. Sales were slowest in the soft home area, which includes bedsheets and towels, he said.

As a result of the performance, Kohl’s raised its earnings guidance for the full year to a range of $3.02 to $3.18 a share from its earlier guidance of $2.95 to $3.15 a share.

Analysts were expecting the company to earn $3.07 a share for the year.

In the current quarter, same-store sales are expected to decline by 2% to 4%, Mansell said. August will be the most difficult month of the quarter because of tough comparisons to last year.

Earnings for the third quarter are expected to be between 51 cents and 56 cents a share, Montgomery said. tiffany on sale had been expecting earnings of 57 cents a share.

For the fourth quarter, Montgomery said sales are expected to decline by 2% to 4% on a same-store basis.

Mansell said store inventory was down 15% at the end of the quarter, and clearance inventory declined by nearly 30%. Those levels were achieved with some steep discounting of seasonal merchandise, he said.

For the coming holiday season, Mansell said, Kohl’s plans to be competitive by offering value. The higher profit margins that come with private label and exclusive brands will allow Kohl’s to offer low prices and still make money, he said. Private and exclusive brands make up about 42% of Kohl’s sales, he said.

Before earnings were announced Thursday, Kohl’s shares closed at $48.27, a gain of 68 cents.