By Sruthi Ramakrishnan
(Reuters) - Department store operator Kohl's Corp (N:KSS) followed larger rival Macy's Inc (N:M) in reporting a better-than-expected profit for the holiday quarter, as lower inventories helped the company avoid deep discounting.
Both Macy's and Kohl's reported weak sales for November and December as they struggle to overcome stiff competition from Amazon.com Inc (O:AMZN) and tepid demand for clothes and accessories.
Kohl's held on to margins as it entered the holiday season with lower inventories and did not have to discount deeply to get rid of unsold holiday stock as it had to in previous years.
Inventories per store were down about 5 percent at the end of the fourth quarter. They had been up 5.7 percent in the year-earlier period.
The average transaction value at its stores was up 3.8 percent in the fourth 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," Chief Executive Kevin Mansell said on a conference call.
Macy's reported a higher-than-expected quarterly profit on Tuesday, helped by the sale of some of its stores and lower costs and taxes but said it would post another year of sales declines.
Kohl's said it expects the sale of sportswear maker Under Armour Inc's (N:UAA) products in its stores, starting early March, to help boost full-year comparable sales by as much as 1 percentage point.
However, the company forecast those sales to be in the range of flat to down 2 percent, while net sales could fall 1.3 percent or grow 0.7 percent.
Net income fell about 15 percent to $252 million, or $1.44 per share, in the fourth quarter, from a year earlier. Analysts on average had expected earnings of $1.33 per share, according to Thomson Reuters I/B/E/S.
Net sales dropped 2.8 percent to $6.21 billion, falling for the fourth straight quarter, missing estimates of $6.22 billion.
Kohl's shares were up 2.2 percent at $42.71 on Thursday.