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MENOMONEE FALLS, WI-In midst of efforts to reshape some of its merchandise offerings, Kohl’s Corp. reported an 18.7% increase in net income for the quarter ended October 30, 2004, totaling $143.8 million, or $0.42 per diluted share, compared with $121.2 million or $0.35 per diluted share a year ago, a figure in line with analysts’ projections. Net sales increased to $2.7 billion from $2.4 billion a year ago, an increase of 14.6% for the quarter. Comparable store sales increased 1.2% for the same period.

For the nine months ended October 30, net income increased 20.0% to $413.3 million or $1.20 per diluted share, compared with $344.3 million or $1.00 per diluted share a year ago. Net sales increased 13.4% to $7.6 billion from $6.7 billion a year ago. Comparable store sales were flat compared to last year.

Currently the company is stressing the introduction of new lines of clothes and other products, and tighter inventory controls, both of which it says are contributing to its good results. For instance, Daisy Fuentes sportswear and sleepwear were rolled out in all of Kohl’s stores during the quarter; the store now sells three lines of Estee Lauder products, which represents a new product category for Kohl’s; and in January, the store will introduce Chaps, the largest brand introduction it has ever done in menswear.

Besides new product lines, Kohl’s expanded its number of stores briskly during the quarter, opening 48 new ones and making an especially pronounced entry into the San Francisco market with 11 stores; the Salt Lake City market with five stores; the Rochester, NY market with three stores. Kohl’s now operates 637 stores, compared with 542 stores at the same time last year, and plans open about 95 stores in fiscal 2005, with 33 stores opening during the first quarter. Looking ahead, the company plans what is probably its most important foray into a new market when it makes an entrance into Florida, opening stores in Orlando and Jacksonville in the fall of 2005.

Larry Montgomery, Kohl’s chairman and CEO, noted during a recent earnings conference call that the company has modified its approach to opening stores. “Previously, our marketing efforts were focused on driving traffic into the stores in the first ten days after the opening,” he said. “Which created long lines at point-of-sale, and difficulties for customers getting in and out of the stores. So we re-allocated marketing dollars over the first three months of the opening, which made for a more pleasant initial shopping experience.”

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