Department chain, Kohl’s Corp (NYSE: KSS) reported on Thursday that its fiscal first quarter profit slipped 4.5% as higher margins were offset by slightly lower-than-expected sales; however, shares were gaining as adjusted earnings comfortably topped analysts’ estimation.
The Company provided a bit cautious outlook for the current quarter though it is expecting sales to improve.
The Company expects adjusted EPS of $1 to $1.08, assuming sales growth is between 1% and 3% for the fiscal second quarter. Analysts’ consensus estimate was for earnings of $1.05 a share on sales growth of 3%.
Speaking to analysts in a conference call, Kohl’s CEO Kevin Mansell said sales trend showed improvement in April as weather got warmer in the U.S, including in the northern parts where Kohl’s have large number of stores. Unusually cold weather in March and April forced shoppers to postpone spring shopping.
“After a slow start, sales improved considerably in April as the weather finally improved in our most weather-sensitive regions,” said the CEO.
“Despite the lower than expected sales, we outperformed our earnings guidance as gross margin results and expense management were better than expected. Our inventory levels are consistent with our expectations,” added Mr. Mansell.
For the fiscal first quarter ended May 4, the Company reported a net income of $147 million or 66 cents a share compared to a profit of $154 million or 63 cents a share, in the year-earlier quarter. Revenue edged down 1% to $4.2 billion.
Earlier in February, Kohl’s projected earnings to be in the range of 55 cents to 63 cents on sales growth of 0.5% to 2.5%. Analysts surveyed by Thomson Reuters expected the company to report earnings of 58 cents a share.
Gross margin improved to 36.4% from 35.9% while overhead expenses fell 0.5%.
Same-store-sales declined 1.9% in the fiscal first quarter however the Company expects that it will either remain flat or increase 2% in the second quarter.
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