Kohl’s Corp. (KSS) reported fiscal 2009 fourth-quarter results before the opening bell on Thursday. The company posted net income of $431 million or $1.40 per share, compared to $336 million or $1.10 per share in the year-earlier quarter. Quarterly earnings also topped the Zacks Consensus Estimate of $1.37 per share.
However, Kohl’s offered a conservative outlook for the first quarter of fiscal 2010, with earnings expected to range between 48 cents and 52 cents per share. The guidance is below the Zacks Consensus Estimate of 54 cents per share, which reduced by 2 cents over the past month as 4 analysts lowered while 1 raised expectations. Shares of Kohl’s have gained more than 3.5% in morning trading Thursday.
For fiscal 2010, Kohl’s anticipates earnings to range between $3.40 and $3.63 per share assuming a 4% to 6% increase in total sales and 1% to 3% growth in same-store sales. This guidance is in line with the current Zacks Consensus Estimate of $3.61 per share, which moved up 3 cents over the past month as 13 of 22 analysts increased while 2 reduced expectations.
Meanwhile, quarterly net sales grew by 8.5% to $5.7 billion from $5.2 billion in the prior-year quarter, primarily due to a 4.5% growth in same-store sales. Gross margin increased 160 basis points (bps) to 36.4% mainly due to prudent inventory management and effective merchandising.
Total operating expenses increased by 7.9% to $1.3 billion from $1.2 billion in the year-ago period. The increase was primarily caused by an 8.0% rise in selling, general and administrative expenses to $1.2 billion. However, growth in the top-line and gross margin more than offset the increase in operating expenses. Consequently, Kohl’s recorded a strong 26.0% growth in operating income to $722 million from $573 million in the year-ago quarter, while operating margin expanded by 180 bps to 12.7%.
During fiscal 2009, Kohl’s had opened 56 new stores. At quarter end, the company had 1,058 stores across 49 states in the U.S. compared to 1,004 stores in 48 states in the year-earlier quarter. In addition, the company completed remodeling in 51 stores during the period versus 36 stores in the previous year.
Kohl’s ended the quarter with cash and cash equivalents of $2.3 billion, compared to $643 million in the prior-year quarter. During the fiscal year, the company generated $2.2 billion of cash from operating activities and utilized $666 million towards capital expenditures, resulting in a free cash flow of $1.6 billion.
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