No Holiday Cheer for Kohl's

Thursday saw Kohl's

report fourth-quarter earnings and, thanks to a disappointing holiday season, the earnings fell 7.9 percent. It is not all bad news though, as, on a per-share basis, the bottom line has improved by 9 percent. This is largely because shares outstanding were down 15 percent from the previous year. According to the

, the current quarter sees KSS forecast per-share earnings of 60 cents on a total slaes increase of 3 percent, below recent estimates from an analyst consensus of 77 cents and revenue growth of 4 percent to $4.31 billion. 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.” He has some right to be pleased, with diluted earnings per share increasing 17 percent to $4.30 and net income increasing 4 percent to $1,167 million. Net sales came in at $18.8 billion, an increase of 2.2 percent. In a Thursday morning research report, Piper Jaffray said that the results were slightly ahead of the company's most recent guidance of $1.79-1.80 provided on 2/2/12. “Pre-released sales results were below our initial expectations due to unseasonably warm weather and FQ4 results reflect a 64bp decline in gross margins, 24bp of operating expense deleverage and $355M of share repurchases.” Citi said that it believe that investors will be disappointed with KSS' 2012 outlook. “While the company guided for a +2% SSS increase in 2012 (in line with our estimate), EPS guidance of $4.75 is significantly below consensus of $4.95 and our estimate of $5.20. We believe that KSS may be planning to invest in price in 2012 to drive traffic.” KSS also issued its initial guidance for FY2012. Kohl's expects earnings per diluted share of $4.75 for the year, based on assumptions of a total sales increase of 4.5 percent and a comparable store sales increase of 2 percent. For 1Q, KSS expects earnings per diluted share of $0.60 based on assumptions of a total sales increase of 3 percent and a comparable store sales increase of 1 percent.