Retail has escaped the doldrums that seemed to last well beyond the Great Recession, and with gas prices falling to near $2 per gallon, the industry seems to have more tailwinds than headwinds. Kohl's (NYSE:KSS) fourth quarter illustrated much of that progress, highlighted by 3.7% comparable-store sales growth and a spike in net income.  

After some of the weaker competition has been weeded out of the retail industry, maybe now is the time to get bullish on a recovery.

Retail is looking strong again
On Thursday morning, Kohl's reported a 3.9% year-over-year increase in sales to $6.3 billion and a 10% improvement in net income to $369 million. Earnings of $1.83 per share were $0.03 above the consensus forecast, giving Wall Street a bit to cheer.

The chart below lays out same-store sales, revenue, and net income growth for Kohl's, Target, and Macy's. These are some of the healthier retailers in the industry, and you can see Kohl's holds up well, especially on the bottom line.


Same-Store Sales Growth

Revenue Growth

Net Income Growth













Note: Target results affected by costs associated with shutting down Canadian operations. Source: Company earnings releases.

CEO Kevin Mansell said management of expenses and inventories enabled the company to beat bottom-line expectations. One key to the solid quarter was managing port slowdowns on the West Coast, which affected imports over the last few months. Having a diverse set of import locations minimized the impact, and management was able to move inventory around to make up for some delays. Growth initiatives also appear to be showing promise. 

Management pointed to Kohl's Greatness Agenda pillars of amazing product, easy experience, personalized connections, incredible savings, and winning teams as a driver of growth. The "amazing product" portion is focusing on national brands, which is currently growing faster than private and exclusive brands. Highlighting that growth was a 24% increase in sales of Nike products and a 27% increase in Jumping Beans from Walt Disney.

The focus on premium brands is paying off and adding 15 brands in 2014 as well as the recent addition of Bliss beauty products should help drive sales growth. 

Encouragement for the future
With the economy growing steadily and unemployment falling below 6%, it should not be surprising that Kohl's and other retailers are bullish on the future. Management thinks overall sales will increase by 1.8% to 2.8% in 2015 with earnings per diluted share rising to a range of $4.40 to $4.60.

Maybe even more telling was the 15% dividend increase to $0.45 per share, yielding about 2.5% at current price levels.

And even those growth figures look conservative. The consumer appears to be back and healthy, and wages should rise if unemployment continues to fall (lower available supply should push up employee pay). All of that is good for the long-term health of retailers.

Combine those positives with the fact that competitors such as Sears and Kmart continue to flounder, and Kohl's should gain market share, even in the face of the growth in online retail. These are encouraging signs for the company, and I would not be surprised to see shares push past their recent highs.