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Kohl’s Roughed Up In Q1 But Earnings Beat Street

For the first quarter ended May 4, Kohl’s Corp. has reported that net income decreased to $147 million, or 66 cents per diluted share, from $154 million, or 63 cents per diluted share, for the year-prior period. Comparable store sales decreased 1.9% in the quarter year over year.

In a conference call, Kohl’s executives related that comps consisted of a 2.4% improvement in units per transaction offset by a 1.1% decline in average unit retail and a 3.2% decrease in number of transactions.

Seasonal apparel was down 8% in the quarter and negatively impacted sales by about 320 basis points, the company noted in the call. Some non-seasonal merchandise categories were positive in the quarter, but those gains were more than offset by the softness in seasonal segments, it related. Home, footwear and accessories were the strongest categories. Electrics and luggage performed particularly well in the home department.

The West was the strongest sales region of the country with the Midwest, Northeast, Southeast and South Central coming in weakest. E-commerce sales increased 31% in the quarter and contributed about 210 basis points to the comp.

Net sales were $4.2 billion, down 1% from $4.24 billion in the year-earlier period. Sales in the quarter missed a published Thomson Reuters average analyst estimate, but earnings per share came out five cents ahead.

“After a slow start, sales improved considerably in April as the weather finally improved in our most weather-sensitive regions,” said Kevin Mansell, Kohl’s chairman, president and CEO, commenting on the results. “Despite the lower than expected sales, we outperformed our earnings guidance as gross margin results and expense management were better than expected. Our inventory levels are consistent with our expectations.”

Kohl’s ended the first quarter with 1,155 stores in 49 states versus 1,134 stores at the same time last year. The retailer opened nine stores during the quarter and said it expects to open three new locations and remodel 30 units in the fall.