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Specialty department store Kohl’s Corporation (KSS - Analyst Report) posted increase in total sales and same-store sales results for the month of January compared with the prior-year period, where all lines of business except Footwear category achieved double-digit comparable store sales increases.

Excluding the sales for the fifth week of Jan 2013, Kohl’s comparable store sales increased 13.3% for the four-weeks ended Jan 26, 2013 versus a same-store sales growth of just 0.6% in the four-week month ended Jan 28, 2012. Kohl’s total sales, excluding the additional week of fiscal 2013, increased 14.1% in the month of Jan 2013 to $1.13 billion compared with 2.4% growth to $0.84 billion in the year-ago month. E-commerce sales also increased 59% over Jan 2012.

The January sales performance was impressive as the company was able to clear out its seasonal merchandise last month. The company witnessed strong performance in the Western region with a mid-teen increase in comparable store sales, whereas the South Central region reported a low double-digit increase in comparable store sales. All other regions reported mid-to-high single-digit increases.

Where the company managed to clear out its merchandises in January, it could not generate sufficient sales during the holiday season, as expected by the company. Kohl’s performance during the holiday season was impacted by unfavorable weather conditions and lower consumer confidence, which forced Kohl’s to give more-than-expected discounts to its customers.

This was reflected in December comparable store sales, which were lower than the company’s expectations. Notably, the company’s November sales were also below expectations.

The sluggish sales also prompted the company to slash its expectations for the fourth quarter and fiscal year 2012, results of which are scheduled to release on Feb 28. The company has reduced its earnings expectation to a range of $1.60 to $1.62 for the fourth quarter and $4.11 to $4.13 for fiscal 2012 versus its previous guidance of $2.00 to $2.08 for the fourth quarter and $4.52 to $4.60 for fiscal 2012.

Estimates for Kohl’s have also been declining ever since it reported its December comparable sales. With the Zacks Consensus Estimates for both fiscal 2013 and 2014 going down, the company now has a Zacks Rank #5 (Strong Sell).

Though the company reported favorable comp sales in January, we still prefer to avoid Kohl’s until we see signs of improvement in the company's overall performance. Some other retail stocks reporting favorable comp sales in January include Macy’s, Inc. (M - Analyst Report) with comp sales growth of 11.7%, Nordstrom, Inc (JWN - Analyst Report) reporting comp sales growth of 11.4% and Gap, Inc (GPS - Analyst Report) with comp sales growth of 8%.

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