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NEW YORK (Reuters) - Kohl's Corp reported
better-than-expected earnings as exclusive lines helped it win
market share, but its outlook fell short of Wall Street
forecasts, sending its shares down 3.8 percent in premarket

The department store chain operator has lured
cost-conscious shoppers away from rivals through a slew of
exclusive merchandise, which makes up about 47 percent of sales
and includes lines such as Simply Vera Wang and Candie's.

"We continue to gain market share as reflected in our
performance in both comparable and total sales growth," Chief
Executive Kevin Mansell said in a statement.

But Kohl's, which operates about 1,100 stores, said it
expects selling, general and administrative expenses to rise 10
percent to 11 percent in the current quarter and 3 percent to 4
percent in the fourth quarter, which includes the key holiday
selling season.

The company reported net income of $260 million, or 84
cents per share, for its fiscal second quarter ended July 31,
up 13.5 percent, from $229 million, or 75 cents per share, a
year earlier.

Sales rose 7.7 percent to $4.1 billion, while same-store
sales, or sales at stores open at least a year, rose 4.6

Analysts had been expecting a profit of 82 cents per share
on sales of $4.09 billion, according to Thomson Reuters

Kohl's expects same-store sales to be up between 2 percent
and 4 percent in the each of the next two quarters.

It expects earnings of 57 cents to 63 cents per share in
the third quarter, below Wall Street forecast of 74 cents.

It expects full-year profit of $3.57 to $3.70 per share.
Previously the top end of its range was $3.75. The average Wall
Street forecast is $3.76.

Mansell said appropriate inventory levels had helped
margins, which edged up 0.3 percentage point during the second
quarter to 40.3 percent. The company said it expects a further
improvement of between 0.2 and 0.4 percentage point in the
third and fourth quarters.

Kohl's shares were down $1.78 to $46.00 in premarket
(Reporting by Phil Wahba; Editing by Derek Caney and John