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Higher margins help Kohl's report better-than-expected fourth-quarter profits, despite a drop in sales

Published: 09:54 23 Feb 2017 EST

Kohl's department store
However, the firm’s net sales declined for a fourth straight quarter, falling 2.8%

Higher margins helped Kohl's Corp (NYSE:KSS) report better-than-expected fourth-quarter profits, despite a 2.8% drop in sales amid tougher conditions for department stores.

Kohl’s saw its net income fall to US$252mln, or US$1.44 per share for the quarter ended January 28, down  from US$296mln, or $1.58 a share  a year earlier, but better than forecasts of US$1.33 per share.

However, the firm’s net sales declined for a fourth straight quarter, falling to US$6.21bn, down from $6.39bn in the same quarter a year earlier.

Like rival Macy's Inc (NYSE:M), Kohl’s saw weak sales in November and December as it struggled to overcome stiff competition from online retail giant Amazon.com Inc (NASDAQ:AMZN) and weak demand for clothes and accessories.

Sales at Kohl's stores open at least a year fell 2.2% in the fourth-quarter, although that was in line with the average analyst estimate, and its gross margin rose to 33.4%, up from 33.1% a year earlier.

Kohl's chief executive Kevin Mansell said: "We saw improvement in merchandise margin, and our team continued to manage inventory and expenses extremely well.”

He added: "Sales results were weak for the quarter in total, driven by declines in brick-and-mortar traffic, and offset somewhat by strength in online demand,”

In early US trading, Kohl’s shares rose by nearly 1.5% to US$42.35.

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