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Kohl's expects sales to pick up in second quarter

A car drives by the Kohl's department store in Arvada, Colorado August 12, 2010.REUTERS/Rick Wilking
A car drives by the Kohl's department store in Arvada, Colorado August 12, 2010.REUTERS/Rick Wilking

(Reuters) - Kohl's Corp on Thursday said it expects sales to pick up in the current quarter, and the retailer reported a better-than-expected first-quarter profit, helped by cost-cutting, sending its shares up 7 percent in trading before the bell.

The department store chain, whose customers are more price-sensitive than those of rival Macy's Inc , said sales at stores open at least a year fell 1.9 percent in the first quarter, but it expects same-store sales to be flat to up 2 percent in the second quarter.

Chief Executive Kevin Mansell said sales trends improved in April as the weather got better in the northern part of the United States, where the chain has a large proportion of its stores.

On Wednesday, Macy's Chief Financial Officer Karen Hoguet also said weather had hurt first-quarter sales but said warmer temperatures in May would likely boost results.

Kohl's posted net income of $147 million, or 66 cents per share, for the quarter ended May 4, beating analysts' average forecast by 10 cents, according to Thomson Reuters I/B/E/S. A year earlier, the company earned $154 million, or 63 cents per share.

Gross margins rose to 36.4 percent from 35.9 percent, helped by lower expenses.

Sales fell 1 percent to $4.20 billion, slightly below the average forecast of $4.26 billion.

Kohl's forecast earnings of $1.00 to $1.08 per share for the second quarter on sales growth of 1 percent to 3 percent.

The company's shares rose to $53 in premarket trading, up from a close at $49.68 on Wednesday.

(Reporting by Phil Wahba in New York and Siddharth Cavale in Bangalore; Editing by Sriraj Kalluvila and John Wallace)