Department store operator Kohl's Corporation has reduced its full-year earnings guidance after blaming a "difficult" retail environment for a third-quarter dip.

Although net sales were up 4.8% to US$3.8bn in the three months ended 3 November, same-store sales fell 2.6%. Net income for the quarter was $194m, down 13.6% on the same period in 2006.

This led to a net sales increase for the first nine months of the year of 8.3% to $11bn and a same-store sales rise of 0.7%, while net income was up 7.7% to $672.2m.

"Our sales results reflected a difficult overall environment," said Kohl's chairman and CEO Larry Montgomery. "We continued to operate our business in a conservative manner, managing inventory investment as we continued our improvement in gross margin, while reducing expenses where possible."

Kohl's dropped its fourth-quarter earnings per share guidance to $1.45-1.51, assuming a comparable sales fall of 0-2%. That would result in full-year earnings per share of $3.52-3.58, down on previous guidance of $3.77-3.87.