Kohl's 4Q Profits up 29%

Menomonee Falls, WI, March 2, 2007--Kohl's reported a 29.3 percent profit increase in the fourth quarter, as the midlevel retailer benefited from strong sales of its exclusive brands. The company posted net income that rose to $484.6 million, or $1.48 per share, in the period ended Feb. 3. That compared with $374.9 million, or $1.08 a share, a year ago.

Sales were up 16.7 percent to $5.4 billion, from $4.7 billion in the same quarter last year.

The earnings beat the expectations of analysts, who predicted Kohl's would earn $1.43 a share on sales of $5.4 billion, according to a poll by Thomson Financial.

For the quarter, same-store sales, or sales at stores opened at least a year, rose 4.1 percent, the company said. Same-store sales are an important indicator of a retailer's health. For the year, same-store sales were up 5.9 percent.

For the year, Kohl's finished with net income up 31.7 percent to $1.1 billion, or $3.31 per share, compared with $842 million and $2.43 per share in the previous year. Sales rose 16 percent to $15.5 billion from $13.4 billion.

Kohl's issued its guidance for this year, saying it expected sales to be up 9 percent to 11 percent, and same-store sales to increase 2 percent to 4 percent. Kohl's said it expected earnings per share this year in a range of $3.68 to $3.84. Analysts surveyed by Thomson Financial expect $3.82 per share.

Sales of exclusive brands, including Polo Ralph Lauren's Chaps line, improved this past year, to represent 34.5 percent of all sales, up from 30 percent in the previous year, company president Kevin Mansell said in an interview with The Associated Press late Thursday.

Kohl's has inked partnerships with celebrities like skateboarding icon Tony Hawk, who has a line of clothing and shoes for boys and young men. This fall, the retailer will sell clothing created by high-end designer Vera Wang.

Three years ago, Kohl's exclusive and private label brands were about 20 percent of sales, so the growth is considerable, said Bob Buchanan, an analyst with A.G. Edwards. Kohl's recognized that rival J.C. Penney Co. was increasing its partnerships, so it followed suit, he said. And it worked.

"I think that they've done a nice job of giving people a reason to walk into their particular store," Buchanan said.

Sales across Kohl's product lines, including clothing, jewelry and housewares, were all up, as were sales across the country, Mansell said.

"There wasn't one thing or one region that carried the results," he said.

Kohl's opened 85 stores during the year and entered markets in Portland, Ore., Seattle, Wash., and Tampa, Fla., finishing the year with 817 stores in 45 states. It plans to add 110 to 115 stores this year.