Kohl’s Corp. (KSS) registered fourth-quarter 2010 earnings of $1.66 per share, which was in line with the Zacks Consensus Estimate. However, earnings were up 18.6% year-over-year from $1.40.
For the full year, earnings came in at $3.65 a share which was up 13% compared to $3.23 in fiscal 2009. However, annual earnings were below the Zacks Consensus Estimate of $3.73.
The year-over-year profits were primarily driven by improved merchandise margins, strong inventory management and successful brand strategies.
Driven by strong profits in fiscal 2010, the company provided guidance for earnings for the first quarter and full fiscal 2011. For the first quarter, the company expects earnings to be in the range of 68 cents to 73 cents, whereas for the full year earnings are projected in the rage of $4.05 to $4.25 a share.
Quarterly Details
Net sales for the quarter recorded a growth of 6.3% to $6.0 billion from $5.7 billion in the year-ago quarter, on the back of market share growth. Revenues were in line with the Zacks Consensus Estimate.
Annual revenues spurred 7.1% to $18.4 billion which was ahead of the Zacks Consensus Estimate of $18.3 billion.
Kohl’s reported a hike of 4.3% in comparable-store sales for the fourth quarter, while for the year comparable-store sales grew 4.4%. The company anticipates total sales to advance in the range of 4.0%–6.0% both in the first quarter and fiscal 2011. The company projects same store sales to spike 2%–4% in the first quarter and full year 2011 as well.
Gross margin expanded 40 basis points (bps) to 36.8%, powered by sales growth, prudent inventory management and effective merchandising.
Total selling, general and administrative expenses grew 4.1% to $1,242 million, compared with the year-ago period.
Kohl’s recorded 13.6% growth in operating income to $820 million from $722 million in the year-ago quarter, while operating margin expanded 90 bps to 13.6%.
Cash, Balance Sheet and Share Repurchase
Kohl’s exited the year with cash and cash equivalents of $2,277 million, compared with $2,267 million in the prior-year. The company generated $1,676 million of net cash from operating activities and utilized $761 million towards capital expenditures. Long-term debt and capital leases at the end of the quarter was $1,678 million.
The Board of Directors increased the share repurchase authorization by $2.6 billion, to $3.5 billion. Further, on February 23, the Board of Directors declared a quarterly dividend of 25 cents per share. This is the first cash dividend paid to shareholders in Kohl’s history. The dividend will be paid on March 30 to all shareholders of record as of March 9, 2011.
Kohl’s primarily competes with Macy’s Inc (M), JC Penney (JCP) and Dillards Inc (DDS), and currently holds a Zacks rank #3 which translates into Short term Hold rating.
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