(Reuters) - Department store chain Kohl’s Corp (KSS.N) raised its full-year profit forecast on Thursday and said it expects to continue its streak of sales gains during the holiday quarter, helped by its exclusive lines like clothes by entertainers Jennifer Lopez and Marc Anthony.
The company forecast that sales at its stores open at least a year would rise 2 percent to 4 percent in the current holiday quarter following a 2.1 percent rise in the third quarter, ended on October 29.
Gross margin, a measure of the profitability of goods sold, edged up slightly during the third quarter — in contrast to rival Macy’s — helped by its push to sell exclusive merchandise and give customers a reason to shop at Kohl’s.
About half of Kohl’s sales come from its private or exclusive brands. That has given it more power to set the prices it wants to and has helped mitigate the pressure on profits from higher cotton and other production costs.
Kohl’s expects gross margin to be steady in the current quarter, up or down 0.1 percentage point compared with a year earlier.
Macy’s Inc (M.N) reported a bigger-than-expected drop in gross margin on Wednesday, sending its shares down.
But Macy’s also gave a rosier holiday sales forecast, expecting same-store sales to rise between 4 percent and 4.5 percent, showing how tough the fight will be to win shoppers.
Kohl’s and Macy’s recently announced their earliest ever store openings on Black Friday, which traditionally kicks off the holiday shopping season.
And one chain’s gains may come at another’s expense. During the third quarter, same-store sales at Kohl’s biggest rival, J.C. Penney Co Inc (JCP.N), fell 1.6 percent.
Kohl’s third-quarter profit rose 19.9 percent to $211 million, or 80 cents per share, beating Wall Street estimates by a penny.
Kohl’s, which operates more than 1,100 department stores and caters to middle-class shoppers, now expects full-year earnings of $4.41 to $4.52 per share, up from an earlier forecast of $4.34 to $4.49.
That compares with the analysts’ average forecast of $4.44 per share, according to Thomson Reuters I/B/E/S.
Reporting by Phil Wahba in New York; Editing by Lisa Von Ahn and John Wallace