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Kohl’s Corporation (KSS - Analyst Report) is set to report its fiscal fourth quarter 2012 results on Feb 28. Last quarter it posted a positive surprise of 4.60%. Let’s see how things are shaping up for this announcement.

Growth Factors This Past Quarter

Kohl’s comparable store sales, improvement in inventory and growing e-commerce business drove the third quarter. The company posted decent third quarter fiscal 2012 results which exceeded both the Zacks Consensus Estimate and the prior-year quarter earnings, owing to growth in revenues and comparable store sales. Kohl’s comparable store sales increased, driven by an improvement in inventory levels. However, gross margin declined due to increased cost of merchandise.

Earnings Whispers?

Our proven model does not conclusively show that Kohl’s is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method)and a Zacks Rank #1, #2 or #3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP: The Earnings ESP is -1.18%. That is because the Most Accurate Estimate stands at $1.62, while the Zacks Consensus Estimate is higher at $1.63, which results in ESP of -0.61%.

Zacks Rank #4 (Sell): We caution investors against this stock as it carries a Zacks Rank #4 (Sell), especially when the company is seeing negative estimate revisions momentum. Kohl’s has witnessed a downward pressure on estimates after it cut its guidance last month, following disappointing holiday season sales in December.

The poor performance in the holiday season due to unfavorable weather conditions has not only lowered consumer confidence but also forced Kohl’s to give more-than-expected discounts to its customers. This is also reflected in company’s December comparable store sales, which increased year over year, but were lower than the company’s expectations.

Though January sales were impressive, Kohl’s failure to generate expected sales in the holiday season led to lowering of the company’s fourth quarter and fiscal year guidance. The company now expects earnings in the 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.

Other Stocks to Consider

Here are some other companies in the retail and wholesale sector you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Express Inc. (EXPR - Snapshot Report), Earnings ESP of +1.35% and Zacks Rank #1 (Strong Buy)

New York & Co (NWY - Snapshot Report), Earnings ESP of +12.50% and Zacks Rank #2 (Buy)

Pricesmart Inc (PSMT - Snapshot Report), Earnings ESP of +1.27% and Zacks Rank #3 (Hold)

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