By Sruthi Ramakrishnan
(Reuters) – Department store operators Kohl’s Corp <KSS.N> and Nordstrom Inc <JWN.N> followed larger rival Macy’s Inc <M.N> in reporting a better-than-expected profit for the holiday quarter as lower inventories helped the retailers avoid deep discounting.
Kohl’s and Nordstrom entered the holiday season with lower inventories and held on to margins as they did not have to resort to deep discounts to get rid of unsold holiday stock as in previous years.
Inventories per store were down about 5 percent at the end of the fourth quarter, Kohl’s said. They had been up 5.7 percent in the year-earlier period.
The average transaction value at Kohl’s stores was up 3.8 percent in the quarter ended Jan. 28, even though the number of transactions per store declined 6 percent.
“We’ve really dramatically reduced inventories this year so our clearance levels and fall transitional inventories are way down compared to last year,” Kohl’s Chief Executive Kevin Mansell said on a conference call.
Nordstrom’s gross margin rose 1.1 percentage points to 36 percent in the fourth quarter due to lower inventories and fewer discounts, the company said.
Excluding items, the company earned $1.27 per share, beating the average analysts’ estimate of $1.15, according to Thomson Reuters I/B/E/S.
Nordstrom’s inventory was down 2.5 percent at the end of the quarter.
SALES UNDER PRESSURE
Kohl’s said it expected the sale of sportswear maker Under Armour Inc’s <UAA.N> products in its stores to help boost full-year comparable sales by as much as 1 percentage point.
Still, the company forecast comparable sales to be flat to down 2 percent and net sales to range between a 0.7 percent increase and a 1.3 percent drop.
Macy’s, which reported a higher-than-expected quarterly profit on Tuesday, had said it would post another year of sales declines.
In contrast, Nordstrom forecast a 3-4 percent rise in full-year sales.
Kohl’s net income fell about 15 percent to $252 million, or $1.44 per share, from a year earlier, beating the average analysts’ estimate of $1.33 per share.
Net sales dropped 2.8 percent to $6.21 billion, falling for the fourth straight quarter and missing estimates of $6.22 billion.
Kohl’s shares were up about 1 percent at $41.25 in extended trading on Thursday, while Nordstrom’s shares were up 2.4 percent at $45.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Maju Samuel and Shounak Dasgupta and Anil D’Silva)