FINANCE

Kohl’s Q4 profit falls 7.9% on sales decline

BY Katherine Boccaccio

Menomonee Falls, Wis. — Kohl’s Corp. reported Thursday that profit for the fourth quarter dropped 7.9% to $455 million, from $494 million a year earlier, as the retailer experienced unexpected revenue declines during the holiday selling period.

Kohl’s reported that total sales dipped 0.3% to $6.02 billion in the period, and same-store sales dropped 2.1%. It was the chain’s first revenue decline in three years

Yet, said chairman and CEO Kevin Mansell on Thursday, the company was “able to navigate a difficult holiday sales season through strong expense and inventory management."

For the year, Kohl’s reported net sales were $18.8 billion, an increase of 2.2%. Same-store sales increased 0.5%.

“With the commitment of each of our 140,000 associates, we were able to navigate a difficult holiday sales season through strong expense and inventory management,” Mansell said in a statement. “We achieved a major milestone in 2011 with our e-commerce business reporting $1 billion in revenues.”

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One bad quarter won’t hurt Kohl’s

BY CSA STAFF

MENOMONEE FALLS, Wis. — While Kohl’s may have reported decreases in both sales and net income for its fourth quarter, fiscal 2011 proved to be another profitable year for the retailer.

The company reported fourth quarter diluted earnings per share increased 9% to $1.81. However, net income for the quarter decreased 8% to $455 million, compared with $494 million ($1.66 per diluted share) a year ago. Net sales for the quarter fell 0.3% to $6 billion, while comparable-store sales decreased 2.1%.

Despite a lackluster fourth quarter, Kohl’s ended fiscal 2011 with adiluted earnings per share increase of 17% to $4.30 and net income growth of 4% to $1.17 billion. Net sales were $18.8 billion, an increase of 2.2%. Comparable-store sales increased 0.5%.

Kevin Mansell, Kohl’s chairman, president and chief executive officer, said, “I am pleased that 2011 was another year of profitability and earnings per share growth for our shareholders. With the commitment of each of our 140,000 associates, we were able to navigate a difficult holiday sales season through strong expense and inventory management. We achieved a major milestone in 2011 with our e-commerce business reporting $1 billion in revenues. We are starting 2012 with considerable brand excitement, with the launch of Rock and Republic, continued excitement from our Jennifer Lopez and Marc Anthony brands, and expansion of the successful ELLE and Simply Vera Vera Wang brands into new categories.”

Kohl’s opened 40 stores during 2011 and now has 1,127 stores in 49 states, compared with 1,089 stores at the same time last year. The company remodeled 100 stores in 2011.

Based on assumptions of a total sales increase of 4.5% and a comparable store sales increase of 2%, Kohl’s said it expects earnings per diluted share of $4.75 for the year. For the first fiscal quarter, the company said it expects earnings per diluted share of 60 cents based on assumptions of a total sales increase of 3% and a comparable-store sales increase of 1%.

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FINANCE

Sears reports $2.4 billion Q4 loss, will spin off some stores

BY Katherine Boccaccio

Hoffman Estates, Ill. — Sears Holdings Corp. reported Thursday a loss of $2.4 billion in the fourth quarter, compared with a profit of $374 million in the year-ago period. And in a move long anticipated by some analysts, the chain also announced plans to tap into its massive real estate holdings to help make up for its faltering retail performance.

Revenue for the quarter slipped 4% to $12.5 billion, from $13 billion. Same-store sales fell 4.1% during the quarter at Sears and 2.7% at Kmart.

In a statement, CEO Lou D’Ambrosio said that the company was taking “immediate actions” to address the losses, including cost and inventory reductions, targeted marketing and hiring for its merchandising team.

The parent to Sears and Kmart disclosed that it plans to separate its smaller Sears Hometown and Outlet Businesses, as well as some hardware stores through a special rights offering that is expected to raise approximately $400 million to $500 million. Sears said the separation will provide additional liquidity to the company and enable it to focus on its core business.

In addition, Sears announced it will sell 11 full-line Sears stores to mall owner General Growth Properties for $270 million. The stores, which are part of GGP, will continue to operate as Sears locations into 2013, with final closing dates to be determined and announced later this year, according to Sears Holdings.

“We’re executing actions to unlock the value of our portfolio and assets,” said Sears CEO Lou D’Ambrosio in a quarterly conference call with analysts. The call itself was unusual in that the chain hasn’t had one since billionaire Edward Lampert took over the company in 2005.

On the call, Sears executives stressed the company had ample liquidity and that restructuring moves would demonstrate the value of its assets.

The plans, which follow news in December that the company would close at least 100 stores to raise cash, are part of the retailer’s aggressive turnaround strategy, which has also included job cuts.

Sears said its quarterly performance was hurt by high costs for cotton and fuel, too-high inventory, and unseasonable weather that led to lower sales of winter gear. The company also cited low consumer demand for two of its biggest categories, appliances and consumer electronics.

For the year, net loss totaled $3.1 billion, compared with net income of $133 million.

Revenue fell 3% to $41.57 billion, from 442.66 billion a year ago.

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