Kohl's Predicts Softer Holiday Sales, Cuts Outlook

Kohl’s (NYSE:KSS) reported weaker quarterly profits on Thursday and said it anticipates a decline in sales during the key holiday shopping period.

The Menomonee Falls, Wis.-based off-price department store reported third-quarter net income of $177 million, or 81 cents a share, compared with a year-earlier profit of $215 million, or 91 cents.

Revenue for the three months ended Nov. 2 was $4.44 billion, down 1% from $4.49 billion a year ago, while same-store sales, a key growth indicator, declined by1.6%, more than the 0.7% decrease predicted by Wall Street.

Both the top and bottom lines fell short of expectations. Analysts on average had been calling for stronger earnings per share of 86 cents on sales of $4.55 billion, according to a Thomson Reuters poll.

Kohl’s CEO Kevin Mansell shrugged off the weakness, saying the company is “well-positioned from a merchandise content and inventory perspective” to gain market share. The retailer is increasing marketing to drive higher store traffic.

However, that didn’t stop the discount department store chain from narrowing its outlook to between $4.08 and $4.23 a share from an earlier $4.15 to $4.35, mostly below the consensus view of $4.23.

That's mostly a reflection of an expected 2% to 4% decline in sales during the critical November and December shopping period, a reflection of consumers tightening their purse strings.

For the fourth quarter ending Feb. 1, Kohl's forecast earnings of $1.59 to $1.74, bracketing the Street’s view of $1.70.

Shares of Kohl’s tumbled 8% to $53.60 in recent trade. They are up 25% on the year.