Kohls Earnings Cheat Sheet: Margins Expand with Strong Revenues, Profit Increases

S&P 500 (NYSE:SPY) component Kohls Corporation (NYSE:KSS) reported its results for the second quarter. Kohl’s Corp. operates department stores that offer apparel, footwear and accessories as well as home products and housewares.

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Kohls Earnings Cheat Sheet for the Second Quarter

Results: Net income for the department store rose to $303 million ($1.09 per share) vs. $260 million (84 cents per share) in the same quarter a year earlier. This marks a rise of 16.5% from the year earlier quarter.

Revenue: Rose 3.6% to $4.25 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: KSS was about in line with expectations as the mean analyst estimate of $1.08 per share. Analysts were expecting revenue of $4.31 billion.

Quoting Management: Kevin Mansell, Kohl’s chairman, president and chief executive officer, said, “I am extremely pleased with our ability to deliver strong earnings growth in a challenging sales environment. Our gross margin rate increased significantly over second quarter of last year as a result of our increased penetration of private and exclusive brands and disciplined inventory management. Prudent expense management across many of our areas, especially in stores, allowed us to achieve lower-than-planned expense growth. We continue to benefit from strong profitability in our credit card partnership with Capital One as bad debt expenses declined significantly over last year.”

Key Stats:

The company has now seen net income rise in three straight quarters. In the first quarter, net income rose 6% and in the fourth quarter of the last fiscal year, the figure rose 14.2%.

Revenue has risen the past four quarters. Revenue increased 3.1% to $4.16 billion in the first quarter. The figure rose 6.3% in the fourth quarter of the last fiscal year from the year earlier and climbed 4.1% in the third quarter of the last fiscal year from the year-ago quarter.

The company has now beaten estimates the last two quarters. In the first quarter, it topped expectations with net income of 73 cents versus a mean estimate of net income of 72 cents per share.

Gross margins grew 0.4 percentage point to 40.7%. The growth seemed to be driven by increased revenue, as the figure rose 3.6% from the year earlier quarter while costs rose 2.9%.

Competitors to Watch: J.C. Penney Company, Inc. (NYSE:JCP), Sears Holdings Corporation (NASDAQ:SHLD), Macy’s, Inc. (NYSE:M), The Bon-Ton Stores, Inc. (NASDAQ:BONT), Dillard’s, Inc. (NYSE:DDS), Saks Incorporated (NYSE:SKS), Nordstrom, Inc. (NYSE:JWN), Target Corporation (NYSE:TGT), Overstock.com, Inc. (NASDAQ:OSTK), and QKL Stores Inc (NASDAQ:QKLS).

Investing Insights: Steve Jobs Prepares to Deliver a New Catalyst for Apple’s Stock.

(Source: Xignite Financials)

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