Kohl's Q2 Wilts On Summer Tax-Free Spending Shift

For the second quarter ended August 1, Kohl's Corp. posted net income of $130 million, or 66 cents per diluted share, versus $232 million, or $1.13 per diluted share, in the year-prior period. Comparable store sales advanced 0.1%, while total sales came in at $4.27 billion versus $4.24 billion in the period a year earlier.

A refinancing action impacted earnings in the current quarter, although it had no effect on last-year's period. Excluding loss on extinguishment of debt, second quarter net earnings were $211 million, or $1.07 per diluted share.

An analyst average estimate from Zacks Investment Research called for earnings of $1.15 per diluted share.

Recently, Kohl's completed a cash tender offer for $767 million of debt and exercised its right to redeem $318 million of notes due in 2017 that were not initially tendered, while it additionally tendered $1.1 billion in new notes. In conjunction with the refinancing moves, the company incurred a loss of approximately $170 million, with $131 million recognized in the second quarter. Kohl's stated that it expects to recognize the additional $39 million loss in the 2015 third quarter when it settles the remaining 2017 notes.

In announcing the financial results, Kevin Mansell, Kohl's chairman, president and CEO, said, "Our sales results were below our plan as the shift of sales in tax-free states from July into August was larger than anticipated. Our expenses were well managed for the season. Our inventory receipts are well-positioned for the back-to-school and fall seasons."

Kohl’s ended the second quarter with 1,164 stores in 49 states versus 1,160 stores at the same time in 2014.