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Kohl's raises FY outlook on strong Q1

Updated to include analyst insight

MENOMONEE FALLS, Wis. — Kohl’s reported that its first quarter diluted earnings per share increased 14% to 73 cents, in line with Citi and Stifel analysts expectations and with the company's updated guidance that EPS would be toward the high-end of 68 cents to 73 cents (provided on May 5). Net income for the quarter was $211 million, compared with $199 million (64 cents per diluted share) a year ago. Net sales were $4.2 billion, an increase of 3.1% for the quarter. Comparable-store sales for the quarter increased 1.3%.

Kevin Mansell, Kohl’s chairman, president and CEO, said, “We are pleased that we were able to achieve double-digit growth in earnings per share through strong expense management and continued gross margin improvement."

Mansell added, “Our E-Commerce business remains on track to achieve $1 billion in sales in 2011. To achieve that goal, we will continue to invest in the business as we purchased a 3rd E-Commerce fulfillment center in Maryland that will be on-line to support holiday 2011 peak season. We have strengthened our marketing for the second quarter and believe that we will see pent-up demand for seasonal businesses which would allow us to achieve a better comp and even stronger financial results in the second quarter."

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 quarter, Kohl’s successfully opened nine stores and completed the remodel of 30 stores. The company said it expects to open an additional 31 stores and remodel an additional 70 stores later this year.

For the fiscal quarter ending July 30, the company expects earnings of 96 cents to $1.02 per diluted share, which is in-line with Citi's estimate and consensus of $1. The company also updated its guidance for fiscal 2011 to $4.25 to $4.40 per diluted share, reflecting its first quarter results and expected second quarter share repurchases, from its initial guidance of $4.05 to $4.25 per diluted share. Citi's current 2011 EPS estimate for Kohl's is $4.35 and consensus is $4.36.

Looking ahead to the second quarter, Stifel analysts expect pent-up demand for seasonal merchandise should drive better comps and stronger financial results at Kohl's.