Kohl's differentiates with 42% profit push
Staff Staff -- Furniture Today, May 25, 2001
MENOMONEE FALLS, WI — Virtually defying the law of gravity in a sodden retail environment, rocket-hot retailer Kohl's Corp. pushed profits into the stratosphere during the first quarter, with earnings shooting up by 42.7 percent, to $75.1 million from $52.6 million a year ago.
Still breaking into new markets — most notably Atlanta, with 15 new stores opened during the period — Kohl's drove its sales higher by 21.1 percent, to $1.5 billion from $1.2 billion last year, layering more than a quarter of a billion dollars on to the top line. Same-store sales advanced by 5.3 percent, on top of a 6.9 percent increase last year.
The first-quarter performance puts Kohl's almost in a class by itself among American retailers. Perhaps only Bed Bath & Beyond can truly be considered its peer, with profits up by 32.9 percent in the quarter, and sales climbing higher by 31.1 percent.
Providing a context for the Kohl's numbers, a handful of other major retailers, some of the starriest names in the retail firmament, turned in first-quarter performances that range from the respectable to the wretched. Just consider, for example: Wal-Mart, the world's largest retailer, its profits up a skimpy 4.1 percent; Target held to a gain of 6.2 percent; Kmart posted a loss of $25 million; Ames was in the red to the tune of 27.7 million; Penney earned a meager $41 million, just five percent of Kohl's profit; Sears profits were off by 25.1 percent; and Saks earnings declined by 21.7 percent.
Helping to fuel the rapid growth in both profits and sales, Kohl's opened 34 new stores during the period, breaking into two new markets, Atlanta market with 15 units and Fayetville/Ft. Smith with three new stores. Four new stores were added to the Hartford.New Haven, CT, market, and 12 other stores were peppered into existing markets.
In addition to the added sales, Kohl's leveraged stronger margins and lower costs into the remarkably strong bottom line. Average gross margin widened by 30 basis points, to 35.0 percent from 34.7 percent a year ago. And gross margin dollars increased by 22.3 percent, to $520,8 million from $425.9 million.
Keeping a mindful eye on overhead, Kohl's pared its costs by 30 basis points, to 22.7 percent of sales form 23.0 percent a year ago.
Remarkably, stockpiles grew more slowly than sales, as inventories moved up by 14.0 percent, compared with the 21.1 percent increase in sales.
Looking ahead, Kohl's is rapidly adding new units: two stor3es in El Paso, TX, in August, and two more in Chicago. In October, Kohl's plans to open 24 new stores, including three more in Atlanta; four in the Oklahome City market; three in the Austin, TX, market; six in the Midwest; and eight more sprinkled across the nation. Next year, Kohl's plans to add 70 new stores, increasing its penetration into the Northeast with an entry into the Boston market and expanding its presence in Texas with a major entry into Houston.
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