Midlevel retailer Kohl's (NYSE:KSS) will report Q4 2006 financial results on Thursday, March 1, and investors doubtlessly hope that its shopping spree continues.

What analysts say:

  • Buy, sell, or waffle? There's no dearth of coverage on Kohl's, as 12 analysts say "buy" and 13 say "hold."
  • Revenues. Sales are expected to grow a robust 16.5% to $5.42 billion, benefiting from the extra week in the fiscal quarter and year.
  • Earnings. Profits are also expected to grow by a healthy 32%, or $1.43 per share.

What management says:
With winter's cold weather finally arriving, demand for warm clothes drove Kohl's sales in January 46.6% higher, while the company reported a 16.7% increase in quarterly sales. However, when you adjust for last year's 13-week quarter, that increase drops to a more modest 4%. The company will release the final figures this week, though it gave out the preliminary numbers earlier this month. Chairman and CEO Larry Montgomery also noted that Christmas gift card redemption pushed sales higher.

What management does:
Kohl's has done a remarkable job getting customers back into its stores. In some ways, its turnaround has mirrored that of J.C. Penney (NYSE:JCP), another midlevel retailer that has successfully redefined its image among consumers. Especially given spruced-up designer fashion offerings from Target (NYSE:TGT) and tough price competition from discount retailers like Wal-Mart (NYSE:WMT), the turnaround at Kohl's is something to appreciate.

Same-store sales, that important retail metric, have not only been steadily growing year over year from the negative numbers Kohl's used to post, but on a quarterly basis, they've consistently beaten last year's results. That success has allowed Kohl's to steadily boost profits at all levels, as the chart below shows.

Margin

10/05

01/06

04/06

07/06

10/06

Gross

35.5%

35.5%

35.6%

35.8%

36.0%

Operating

10.3%

10.6%

10.7%

10.9%

11.2%

Net

6.1%

6.3%

6.4%

6.5%

6.8%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
When my significant other worked at Penney's, I missed her warning that the company was growing, and that its stock might be a decent buy. Over the past four years, Penney's stock has more than tripled in value. Now that she's working for Kohl's, I'm equally tempted to listen to her take on how the company is not only remodeling existing stores, but expanding them to create flagship destinations. During that same four-year period, Kohl's stock has risen just 20%, though it's up more than 70% since its 2004 lows.

Considering Kohl's performance improvements in just the past two years, I think an investment here wouldn't be too little, too late.

Related Foolishness:

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Fool contributor Rich Duprey owns shares of Wal-Mart, but does not own any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.