Q. I am a shareholder of Kohl’s Corp and want to know if I can expect better performance from the stock.A. The reality for the nation’s department stores and their investors in 2011 is that high cotton prices are raising the cost of apparel, and high gasoline prices are constricting shopper budgets.Shares of Kohl’s (KSS) are down one percent this year after a one percent gain last year and a 49 percent increase in 2009.But even though it was hampered by markdowns and weak demand for spring merchandise due to cool weather, Kohl’s first-quarter earnings were up six percent. It has turned in five years of positive earnings and positive free cash flow.Indicative of its solid cash position, the board of directors in February announced the first cash dividend in the firm’s history, a quarterly dividend of 25 cents per common share that was paid in March. It also increased its share repurchase authorisation by $2.6 billion, to $3.5 billion.Kohl’s operates about 1,100 stores in 49 states (only Hawaii is excluded) that focus on mid-priced apparel, accessories, beauty and home products. It has benefited from cost cutting, store remodelling and the opening of new stores with smaller and more productive square footage.It is also expanding its lucrative private-label brands, an upcoming example being a new line of apparel from Jennifer Lopez and husband Marc Anthony this fall.Consensus analyst recommendation on Kohl’s stock is “buy,” according to Thomson Reuters, consisting of 12 “strong buys,” four “buys” and six “holds”.Zacks Equity Research, which currently has a “hold” recommendation on Kohl’s stock, said it remains encouraged by the retailer’s consistent merchandise mix over the past three years. But while the company’s low-cost structure is a positive for ongoing profitability, it added, “increased competition from Target Corp is a concern”.Kohl’s is growing online. It recently purchased a building in Edgewood, Maryland, for e-commerce distribution, its third centre solely serving e-commerce sales. The 602,000-square-foot facility is scheduled to open in July 2011 and will be extended to 1 million square feet by 2012. The e-commerce website of Kohl’s, www.kohls.com, in 2010 experienced a sales increase of 52 percent to $717 million from $473 million in 2009, according to the firm.Earnings are expected to increase 20 percent this fiscal year and 14 percent next year, according to Thomson Reuters. The five-year annualised growth rate expectation of 14 percent compares to 16 percent forecast for its peers.Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, 555 N. Central Ave., Suite 302, Phoenix, Arizona 85004-1248, or by e-mail to andrewin[AT]aol.com.