WRAPUP 1-Kohl's, Nordstrom give tepid forecasts, shares fall

Fri May 14, 2010 12:09am BST

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* Kohl's, Nordstrom FY 2010 forecast disappoint analysts

* Kohl's shares off 5.8 pct

* Nordstrom off 2 pct after hours

By Phil Wahba

NEW YORK, May 13 (Reuters) - Two top U.S. department store operators on Thursday reported double-digit profit growth for the first quarter but offered full-year forecasts that suggested they have concerns about the strength of consumer spending.

Kohl's Corp (KSS.N) and Nordstrom Inc (JWN.N), which serve clienteles at different price points, have been among the strongest performers in the retail sector and won market share from rivals, and investor expectations have run high.

Kohl's, which operates mid-level stores, reported a first-quarter profit that beat analyst estimates, but its top executive said he preferred to be cautious when looking ahead.

"We don't want to get ahead of ourselves," Kohl's Chief Executive Kevin Mansell told analysts. [ID:nN13258880]

"Demand in the categories in which we operate is flat or down over the last couple of years. Therefore, the successful retailers are going to have take business from others," Mansell later told Reuters in an interview.

The company raised its fiscal 2010 outlook to $3.57 to $3.75 a share from a prior view of $3.40 to $3.63 a share, but that fell short of the $3.77 a share expected by Wall Street.

Upscale retailer Nordstrom Inc reported a 43 percent increase in earnings but missed first-quarter Wall Street forecasts, hobbled by high selling and administrative costs, including those related to new store openings and commissions for sales staff. [ID:nN13189879]

Nordstrom raised its fiscal full-year profit forecast to a range of $2.50 to $2.65 per share, from $2.35 to $2.55. The midpoint of that range is below the $2.61 per share estimated by Wall Street analysts. [ID:nN13189879]

After Nordstrom last week reported a 12 percent sales surge during the quarter at its stores open at least a year, Wall Street was hoping for more, an analyst said.

"There could have been a bolder increase," said Manning & Napier analyst Walter Stackow. His firm holds Kohl's and Nordstrom shares.

In a sign that conservative forecasts may be justified, Kohl's and Nordstrom said that shoppers' average amount spent per transaction was down in the quarter, a trend Macy's Inc (M.N) also noted when it reported results on Wednesday. [ID:nN12173518]

Kohl's and Nordstrom suffered from bad timing. Their forecasts came on a day when Wall Street was particularly anxious about retail and sold off stocks in the sector.

The S&P Retail Index .RLX was down 3 percent on Thursday. Macy's Inc and JC Penney Co Inc (JCP.N) each fell about 5 percent, while Kohl's was down 5.8 percent.

Nordstrom was down 2 percent in after-hours trading, in addition to a 4 percent drop during normal trading. (Reporting by Phil Wahba; Editing by Steve Orlofsky)

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