Kohl's 4Q sales, earnings 'more like it' for results

Staff -- Home Textiles Today, 3/26/2001

MENOMONEE FALLS, WI -Cruising through a soft economy the way a lawn mower cuts through grass-no opposition and no competition-rapidly expanding Kohl's Corp. drove fourth-quarter profits up by almost 50 percent during the same holiday season that left most other U.S. retailers falling far short of their numbers.

Putting the heartland retailer in a class by itself, profits in the crucial Christmas quarter jumped up by 48.0 percent, to $178.5 million from $120.6 million last year.

Not far behind, sales advanced by 38.3 percent, to $2.2 billion from $1.6 billion a year ago, adding more than $600 million to the top line, lifted by a one-two punch of new store openings and remarkably strong same-store sales. While most retailers had to make do with comps in the low single digits, Kohl's lifted its same-store sales up a balmy 12.9 percent.

Driving the strong profits, in addition to the stronger sales, the retailer managed to strengthen its margins and at the same time cut costs.

Average gross margin widened by 20 basis points, to 33.1 percent from 32.9 percent a year ago. Lifted mostly by the stronger sales, gross margin dollars increased by 39.3 percent, to $736.7 million from $528.9 million last year.

With sales rocketing sharply higher, operating costs declined as a percentage of sales by 40 basis points, to 17.9 percent from 18.3 percent the previous year.

For all of last year, Kohl's profits expanded by 44.2 percent, to $372.1 million from $258.1 million last year. Sales increased by more than a third, rising by 35.0 percent, to $6.2 billion from $4.6 billion. Same-store sales moved up by 9.0 percent.

Helping to drive both top and bottom lines, Kohl's opened 61 new stores last year, and it doesn't stop there, said ceo Larry Montgomery. "Over the next three to four years, we plan to move Kohl's from a regional retailer to a national chain, with stores from coast to coast. During 2001 and 2002, we will continue our expansion into the Northeast, including our entry into Boston and continued expansion in Texas with a major entry into Houston and new stores in Austin and El Paso."

And as for new markets, "In 2003, we plan to begin a major expansion into the Southwest region of the country with a significant entry into Los Angeles. The process is underway to identify a site to build a distribution center to support our future growth in this region. Plans are currently under way for further entries into Southern California, Arizona and Nevada in 2003 and 2004."

*vs. year-earlier figures