Kohl’s Corporation (NYSE: KSS), operator of family-oriented department stores, today reported a sharp decline in its first-quarter profit as its gross margin were hurt by price cuts designed to lure shoppers.
KSS shares fell sharply in pre-market trading today following the release of first-quarter results. At last check, the stock was trading 2.67% lower at $49.50.
Kohl’s, which operates 1,134 stores, today reported first-quarter net income of $154 million, or $0.63 per diluted share, down from $201 million, or $0.69 per diluted share reported for the same period in the previous year. Net sales for the quarter were $4.2 billion, up 1.9% over the same period in the previous year. Comparable store sales for the quarter, meanwhile, rose 0.2% in the first quarter.
Kevin Mansell, Chairman, President and CEO of Kohl’s, said that KSS’ first-quarter results reflect the implementation of strategy to initiate lower pricing in order to provide greater value to customers and this planned action led to significantly lower gross margins for the quarter. Mansell said that strong management of expenses allowed KSS to achieve its earnings goal for the quarter. He added that the company has accelerated new receipts into second quarter to ensure it is well-positioned from an inventory perspective for the Back-to-School season.
For the second quarter, which ends on July 28, 2012, KSS expects earnings to come in between $0.96 per diluted share and $1.02 per diluted share. KSS expects total sales growth to be 2%-3% in the second quarter. The company expects comparable store sales growth of flat to 1%.
For the full fiscal year, Kohl’s expects earnings of $4.75 per diluted share.
Kohl’s Corporation also said that its Board of Directors declared a quarterly dividend of $0.32 per share on the company’s common stock. The dividend is payable on June 27, 2012.
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