Kohl's puts up big 2Q numbers, and gets punished

MENOMONEE FALLS, Wis. (AP) -- Kohl's breezed past profit and revenue expectations for the second quarter and raised its outlook for the year, only to be punished by investors before the opening bell Tuesday.

The reaction on Wall Street was similar last week when Macy's topped almost all expectations and raised its expectations for the year, and was rewarded with its biggest single-day stock sell-off of the year.

Retail industry analysts cannot seem to agree on what is causing investors to flee after seemingly strong earnings reports, but there are two consistent themes.

Shares have roared back from a period of turmoil for department stores, and some may believe they've grown too expensive. Kohl's shares have risen 111 percent in the past year and Macy's shares are up 96 percent. The index that tracks shares in department stores like Kohl's is up 50 percent in that same period.

There may also be some disappointment, given the strong profit and revenue numbers this quarter, that companies like Kohl's and Macy's are not raising their expectations for the year even more.

For the three months ended Aug. 4, Kohl's Corp. earned $292 million, or $1.76 per share, far exceeding the per-share expectations of $1.65 that analysts had projected, according to a survey by Zacks Investment Research.

Clothing, both men's and women's, were huge sellers during the quarter.

The Menomonee Falls, Wisconsin, company did much better than last year, when it reported $208 million, or $1.24 per share.

Revenue was $4.57 billion, up from $4.4 billion, which also topped projections for $4.45 billion.

Sales at store open at least a year, a key indicator of a retailer's health, climbed 3.1 percent, which was in line with expectations, but it's a sharp turnaround from a year ago, when those sales fell 0.4 percent. It was the fourth consecutive quarter of rising same-store sales.

Kohl's raised its per-share profit expectations to a range of $4.96 to $5.36 this year, up from between $4.86 and $5.31. Adjusted for one-time charges and benefits, it expects earnings between $5.15 and $5.55 per share, up from $5.05 to $5.50 per share.

Analysts polled by FactSet expect full-year earnings of $5.39 per share.
 

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