Retailer Kohl’s Corporation (KSS - Analyst Report) delivered better-than-expected results in the fourth quarter and fiscal 2014 on the back of improved comparable store sales (comps).

In the fourth quarter, Kohl’s reported earnings of $1.83 per share, which beat the Zacks Consensus Estimate of $1.80 by 1.67%. Earnings also improved by 17% from the prior-year quarter earnings driven by higher sales, comps growth and prudent management of expenses and inventories.

Sales and Margins

Net sales of $6.337 billion beat the Zacks Consensus Estimate of $6.302 billion and increased 3.9% from the year-ago level owing to an increase in comps.

Comps increased 3.7% in the fourth quarter, driven by higher transactions per store and an increase in average transaction value. This was, in fact, the first positive comps after persistent declines for more than a year. Kohl’s continuous efforts to improve its base business and its focus on the strategic initiative Greatness Agenda turned around results in the quarter.

Gross margin contracted 10 basis points (bps) to 33.9%, while operating margin expanded 30 bps to 10.3%.

Fiscal 2014 Results

Kohl’s reported earnings of $4.24 per share, beating the Zacks Consensus Estimate of $4.22 by 0.5%. Earnings also improved 5% from the prior fiscal year. Net sales of $19.02 billion marginally beat the Zacks Consensus Estimate of $18.99 billion and were almost flat with the prior year.

Store Update

In fiscal 2014, Kohl’s operated 1,162 stores in 49 states. The company opened seven stores, relocated two existing stores and closed three stores in the fiscal year.

Other Financial Details

As of Jan 31, 2015, Kohl’s held $1.41 billion of cash and cash equivalents compared with $631 million as of Nov 1, 2014. The company ended the quarter with long-term debt of $2.79 billion, flat sequentially.

During the quarter, Kohl's board announced a 15% increase in quarterly dividend. The new dividend of 45 cents per share will be paid on Mar 25 to shareholders as of Mar 11.

Fiscal 2015 Guidance

Kohl’s provided an initial guidance for fiscal 2015. The company expects fiscal 2015 earnings per share in the range of $4.40–$4.60, higher than the prior-year earnings of $4.24. The Zacks Consensus Estimate for fiscal 2015 is pegged at the higher end of the guidance. From flat revenues seen on the last fiscal, the company expects sales to increase 1.8% to 2.8% in fiscal 2015, driven by comps growth of 1.5–2.5%.

Kohl’s has a Zacks Rank #2 (Buy). Other companies worth considering in the retail sector include Citi Trends, Inc. (CTRN - Analyst Report), Stage Stores, Inc. (SSI- Snapshot Report) and Tilly’s Inc. (TLYS - Snapshot Report). All these sport a Zacks Rank #1 (Strong Buy).