MENOMONEE FALLS, Wis. — Strong private brand performance and smarter expense management helped Kohl's deliver a hefty earnings increase and respectable sales growth for its second quarter.
The company reported second quarter diluted earnings per share increased 30% to $1.09. Net income for the quarter was $303 million, compared with $260 million (84 cents per diluted share) a year ago. Net sales were $4.2 billion, an increase of 3.6% over the comparable prior year quarter. Comparable-store sales for the quarter increased 1.9%.
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.”
Kohl’s ended the quarter with 1,097 stores in 49 states, compared with 1,067 stores at the same time last year. During the first half of the year, Kohl’s opened nine stores and completed the remodel of 85 stores. The company expects to open an additional 31 stores and remodel an additional 15 stores next month.
For the third quarter, Kohl’s expects total sales to increase between 4% and 6% and comparable-store sales to increase 2% to 4%.
As a result of its second quarter performance, Kohl’s is increasing its fiscal 2011 guidance from $4.25 to $4.40 per diluted share to $4.45 to $4.60 per diluted share.