The department store operator's tepid outlook overshadowed a slightly better-than-expected quarterly profit.
Kohl's said last year that it would take over 31 of the bankrupt Mervyn's locations. It is reopening several of those stores throughout 2009, adding to costs for the period.
For the third and fourth quarters, Kohl's forecast earnings below analysts' estimates, as selling, general and administrative costs are expected to rise 3 to 4 percent.
Kohl's also expects the sales environment to remain rough as it heads into the holiday sales season, as shoppers favor deep discounts and essential items in the recession.
We would expect the second half of this year to continue to be a fight for market share, Chief Executive Kevin Mansell said in a conference call.
Kohl's expects to earn 40 cents to 44 cents a share in the current third quarter. Analysts on average, expected 47 cents, according to Reuters Estimates.
For the fourth quarter, it expects to earn 99 cents to $1.06 a share, while analysts were expecting $1.13.
Menomonee Falls, Wisconsin-based Kohl's also sees comparable-store sales falling 3 percent to 5 percent and total sales ranging between a fall of 1 percent and a rise of 1 percent in both periods.
SECOND QUARTER EXCEEDS ESTIMATES
Net profit fell to $229 million, or 75 cents a share, in the second quarter ended August 1 from $236 million, or 77 cents a share, a year earlier.
Analysts had expected a profit of 74 cents a share, Reuters Estimates showed.
Net sales rose 2.2 percent to $3.8 billion.
Sales for the first half of 2009 exceeded our plans and indicated market share gains across most merchandise areas and regions, Mansell said in a statement.
Earlier this month, Kohl's posted a 0.4 percent increase in July sales at stores open at least one year, citing strong demand for footwear, home goods and accessories.
The company, which opened 19 stores in its first two quarters, expects to open an additional 37 later this year.
Kohl's shares were down 60 cents to $51.67 on the New York Stock Exchange.
(Reporting by Aarthi Sivaraman in Seattle and Dhanya Skariachan in Bangalore; Editing by Derek Caney and Lisa Von Ahn)