Kohl's 3Q profit falls on flat sales, guidance narrowed

Kohl's reported a drop in third-quarter profit Thursday on higher costs and essentially flat revenue, but raised its guidance for the year.

Hurricanes and unseasonal weather weighed on sales at the department store, but it did have a strong back-to-school shopping season. Same-store sales, a figure industry analysts watch closely, rose 0.1 percent. That's better than the 0.6 percent decline analysts had expected.

"While a comparable sales rise of 0.1% may be meager, the fact that it brings to an end an extended period of decline is significant," wrote Neil Saunders, the managing director of GlobalData Retail. "Unfortunately for Kohl's, the uplift was not reflected on the bottom line where operating income fell by 14.6% and net income by 19.9%."

Profit fell 18 percent to $117 million, or 70 cents per share, falling short of expectations by 2 cents, according to a survey of analysts by Zacks Investment Research.

Shares tumbled 9 percent before the opening bell.

Kohl's Corp, based in Menomonee Falls, Wisconsin, reported revenue at $4.33 billion, slightly better than Wall Street was expecting.

Kohl's raised the low end of its full-year guidance and now expects earnings per share between $3.60 and $3.80. The low end was previously $3.50 per share.

The company is in the midst of a transition, with CEO Kevin Mansell retiring next year. Michelle Gass, a former Starbucks executive who has been with the company since 2013, will take over the leadership post.

Kohl's and its competitors have been trying to reinvent their operations as shoppers move increasingly online and shift their spending away from clothing. Earlier this year, Kohl's expanded its partnership with Amazon, saying it would sell devices like the Echo and Fire tablets at 10 of its stores. It also said it will pack and ship eligible Amazon return items for free at the 82 stores offering the service.


Elements of this story were generated by Automated Insights using data from Zacks Investment Research. Access a Zacks stock report on KSS at https://www.zacks.com/ap/KSS