Kohl's Profit Climbs on Private, Exclusive Labels, Lifts Forecast

Kohl’s (KSS) revealed a 20% improvement in third-quarter profit on Thursday and lifted its fiscal forecast, driven by new exclusive clothes deals, private labels and tighter expenses that have helped improve gross margins.

The company raised its fiscal view to a range of $4.34 to $4.49 a share, from its earlier view between $4.41 and $4.52 a share. Wall Street is looking for a fiscal 2011 profit of $4.44.

The department store operator attributed an improvement in gross margin, a measure of profitability of goods sold, to increased penetration of private and exclusive brands and disciplined inventory management. The company tightened costs, allowing it to grow expenses at a slower rate than it expected.

The Menomonee Falls, Wis.-based moderately priced retailer posted net income in the third quarter of $211 million, or 80 cents a share, compared with $176 million, 57 cents a share, in the same quarter last year.

The results were ahead of average analyst estimates polled by Thomson Reuters of 79 cents. Revenue for the three-month period was $4.4 billion, up 3.8% from$4.2 billion a year ago, matching the Street’s view.

The gains were led by the exclusive introduction of the Jennifer Lopez and Marc Anthony brands.

“I am extremely pleased with our ability to deliver strong net income and earnings per share growth in a challenging sales environment,” Kohl’s CEO Kevin Mansell said in a statement.

“We expect our collection of powerful brands supported by significant marketing investments, especially in broadcast and digital media, to deliver a strong Holiday season,” he said.

The stronger results come a day after the company’s board declared a quarterly cash dividend of 25 cents a share, payable on Dec. 28 to shareholders of record on Dec. 7.

Looking ahead, the company expects to deliver sales growth between 4% and 6% during the quarter, with comparable sales up 2% to 4%. Assuming those sales, earnings are forecasted to be between $1.93 and $2.04 a share, compared with the Street’s view of $1.94.

The company says it is on track to hit $1 billion in e-commerce sales in 2011.