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Kohl’s Rises After Declaring First Dividend in Its History

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Kohl’s Corp. Chairman and CEO Kevin Mansell
Kohl’s Corp. Chairman and Chief Executive Officer Kevin Mansell. Photographer: Jonathan Fickies/Bloomberg

Feb. 24 (Bloomberg) -- Kohl’s Corp., the Wisconsin department-store chain that has lured shoppers away from rivals like Sears Holdings Corp., rose the most in three months in New York trading after declaring its first-ever dividend.

The quarterly dividend will be 25 cents a share, the Menomonee Falls-based company said today. Bloomberg analysts predicted a dividend of 13 cents. Kohl’s also said profit in 2011 will be as much as $4.25 a share, compared with the $4.35 average of estimates compiled by Bloomberg.

Chief Executive Officer Kevin Mansell also more than tripled Kohl’s stock-buyback program to $3.5 billion, citing the chain’s financial strength. The retailer, which has almost 1,100 stores, competes with chains like Sears and discounter Wal-Mart Stores Inc. in the U.S., where consumers are spending again as the economy recovers.

“What they’re saying is that ‘we’re not going to waste the money, we’re going to return a good portion of it,’” said Joel Levington, managing director of corporate credit for Brookfield Investment Management Inc. in New York.

Kohl’s buyback authorization amounts to more than 20 percent of the shares outstanding, based on yesterday’s closing price. The shares climbed $1.78, or 3.4 percent, to $53.80 at 4 p.m. in New York Stock Exchange composite trading. The gain was the biggest since Nov. 17.

Kohl’s, which has slowed its store openings and cut capital expenditures by more than half from two years ago, will have enough cash to repurchase shares and pay the dividend without hurting its credit rating, Levington said.

The chain also predicted first-quarter earnings of 68 cents to 73 cents a share. That compares with the 71-cent average of predictions compiled by Bloomberg. Kohl’s net income in the period ended Jan. 29 rose 14 percent to $493 million, or $1.66 a share, from $431 million, or $1.40, a year ago. Sales rose 6.3 percent to $6.04 billion in the fourth quarter.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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