NEW YORK — Kohl’s Corp. Thursday reported second-quarter sales and earnings that exceeded Wall Street’s expectations, partly because of increased gross margin rates.
The company’s earnings, posted after market, climbed 24.1 percent, to $232.4 million, or 69 cents a diluted share, for the three months ended July 29, compared with $187.2 million, or 54 cents a share, in the year-ago period. Wall Street’s consensus estimate was 65 cents a share. Sales increased 14 percent, to $3.29 billion from $2.89 billion.
Earnings for the six-month period grew to $399.6 million, or $1.17 a diluted share, an increase of 28.1 percent over the previous year’s $311.9 million, or 90 cents. Sales for the first half were up 15 percent, to $6.48 billion from $5.63 billion.
Citing the strong second-quarter performance, the retailer said it was raising its third-quarter earnings guidance to 56 cents a diluted share from 53 cents, and the fourth-quarter forecast to $1.42 a diluted share from $1.36. The company also increased its full-year fiscal 2006 earnings guidance to $3.04 to $3.14 a diluted share from $2.91 to $3.02.
Executives said consistency and improved gross margin rates helped propel growth.
“We are very pleased with our performance for the second quarter and in the first half of the year,” Larry Montgomery, chairman and chief executive officer, said in a statement. “We exceeded our guidance for both sales and net income. We continue to see consistency in all lines of business and all regions of the country. At the same time, we achieved improvement in our gross margin rate and experienced significant expense leverage on our sales increase. We also made great progress on our share repurchase program, buying over $1 billion of our own stock during the quarter.”
Kohl’s said it repurchased about $1.1 billion in shares during the second quarter as part of a $2 billion share-repurchase program that was previously announced.
The retailer said it would open 68 stores in the fall, 65 of them in an October blitz. The store launches will fulfill Kohl’s goal of opening 85 units in fiscal 2006. Kohl’s said it would enter Washington with four stores in the Seattle market, and would continue expansion into Florida, entering the Tampa market with three stores.