Nov. 13 (Bloomberg) -- Kohl's Corp., the fourth-largest U.S. department-store company, said profit fell for the fifth quarter in a row and reduced its annual profit forecast.

The shares fell 4 percent in late New York trading after Kohl's said it now expects fourth-quarter profit of 90 cents to $1.05 a share, compared with its previous projection of as much as $1.34, as same-store sales drop 8 percent to 12 percent. For the year, Kohl's said earnings will be $2.84 at most, compared with as much as $3.18.

Third-quarter net income dropped 17 percent to $160.2 million, or 52 cents a share, from $194 million, or 61 cents, a year earlier, the Menomonee Falls, Wisconsin-based company said today in a statement.

Kohl's has cut inventory to adjust for fewer visits as customers grappling with shrinking value in their homes and stock portfolios pare spending. Kohl's has stepped up advertising by mail and e-mail and is stressing low prices as Wal-Mart Stores Inc. posts sales gains.

``We still carry too much inventory,'' Chief Executive Officer Kevin Mansell said during the company's earnings call today. ``We expect the environment will remain extremely competitive'' during the holiday season.''

Kohl's fell $1.22 to $29.35 at 4:41 p.m. New York time after the earnings were announced. Earlier, they rose $1.70, or 5.9 percent, to $30.57 in New York Stock Exchange composite trading.

Kohl's is increasing its marketing compared with last year's fourth quarter, Mansell said during the call. Kohl's has to be aggressive in seeking customers, he said during an Oct. 29 telephone interview.

Careful Spending

``I think what we're all facing, and I don't think we're unique in this, is a consumer that does not have enough to spend in total,'' Mansell said then. ``And she's going to be much more careful about where she spends it, and you're going to have to give her more of a reason and find a way to stretch her budget further if you're going to get your share.''

Kohl's beat the 51-cent average estimate of 18 analysts surveyed by Bloomberg.

Sales fell 0.6 percent to $3.8 billion, Kohl's said Nov. 6. Sales at stores open at least a year, considered a key gauge of retail performance because they measure only established locations, dropped 6.7 percent in the quarter.

Customer visits fell while average transaction size has been steady, Mansell said. Kohl's cited women's clothing and home goods as the worst-performing categories.

Kohl's will still fare better than some other retailers, said Jon Fisher, a fund manager at Fifth Third asset Management in Minneapolis, because ``they're in a better position'' with inventory, finances and marketing. Fifth Third oversees $22 billion in assets including Kohl's shares.

``Right now, customers are comfortable going into a Kohl's to shop,'' Fisher said after results were released, because of the ``credibility'' the retailer has built with customers.

To contact the reporter on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net.

Last Updated: November 13, 2008 18:52 EST