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UPDATE 2-Kohl's sales growth, 2018 outlook send shares higher

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NEW YORK, March 1 (Reuters) - Kohl's Corp on Thursday reported strong comparable sales fueled by robust holiday-season demand for activewear and online growth and issued a 2018 earnings outlook that topped expectations, sending its shares higher in premarket trading.

The retailer has now had two quarters of same-store growth after six periods of declines in an industry-wide slump amid competition from online, fast-fashion and off-price sellers. It has been working to improve gross margins that are dented by shipping costs for digital orders.

Kohl's same-store sales rose 6.3 percent in the fourth quarter ended Jan. 27. Analysts on average had expected sales to rise 6.1 percent in stores open at least 12 months in the quarter, according to Thomson Reuters I/B/E/S.

It stood out against other department stores during a strong U.S. holiday shopping season thanks to Nike and Under Armour sales, digital growth, new customers and a focus on rolling out exclusive items more quickly and tailoring them by market.

Shares were up 2.6 percent at $67.75 in premarket trading.

They had already run up more than 60 percent since early November, fueled partly by its previously reported November and December sales figures.

Revenue of $6.78 billion slightly edged out analyst estimates and was up 9 percent from a year earlier.

Gross margin was 33.8 percent, compared to 33.4 percent during the same period a year earlier.

Kohl's has embraced the so-called omnichannel approach to drive traffic and incremental sales by partnering with Amazon.com Inc to sell electronics and accept the online seller's returns in certain stores.

It also benefits from a store base that is largely outside of malls, where foot traffic has plunged.

The retailer has melded its online and brick-and-mortar presence by offering buy-online, pick-up-in-store discounts for certain items. This helps lure customers to stores where they may make impulse buys, while cutting shipping costs and improving margins for the company.

Kohl's has also been shrinking the size of many locations to cut fixed costs and inventory needs and plans on leasing unused space to grocers or convenience stores to boost foot traffic.

Kohl's expects fiscal 2018 earnings per share of $4.95 to $5.45, on comparable sales growth of flat to 2 percent. Analysts estimate full-year earnings of about $4.72 a share.

The company said gross margin should increase 5 to 10 basis points compared to 2017.

Earnings per share in the quarter rose from the same period a year earlier to $1.99, excluding the impact of a U.S. tax overhaul and store closures. Excluding a state tax settlement EPS was $1.87.

Analysts on average had forecast earnings of $1.77 per share. (Editing by Chizu Nomiyama, Bernadette Baum and Frances Kerry)