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Nov. 10 (Bloomberg) -- Kohl’s Corp., the fourth-largest U.S. department-store chain, said third-quarter profit rose 20 percent, helped by sales of the new Jennifer Lopez brand of clothing, jewelry and home goods.

Net income increased to $211 million, or 80 cents a share, in the period ended Oct. 29, from $176 million, or 57 cents, a year earlier, the Menomonee Falls, Wisconsin-based company said today in a statement. Analysts predicted 79 cents, the average of estimates compiled by Bloomberg.

Kohl’s Chief Executive Officer Kevin Mansell has stepped up marketing and promotions to lure U.S. consumers beset by a slumping housing market and 9 percent unemployment. Unlike Macy’s Inc., Kohl’s was able to expand its gross margin, a measure of profitability, as the Jennifer Lopez and Marc Anthony brands met what it called “aggressive” sales plans.

“A cautious consumer means that you have to invest more in marketing to get her attention, and you have to give her great value, so that’s really our focus for the holiday,” Mansell said today in a telephone interview.

Kohl’s rose 3.5 percent to $56.18 at 11:35 a.m. New York time. The shares were little changed this year before today.

The company raised its full-year earnings forecast to $4.41 to $4.52 a share. Last month, Kohl’s had cut the range to $4.34 to $4.49, citing the impact of lease accounting changes. Analysts predicted $4.44 on average.

Sales rose 3.7 percent to $4.38 billion, Kohl’s said Nov. 3. Sales at stores open at least a year advanced 2.1 percent.

Gross Margin Widens

Mansell called the sales gain disappointing, even though it was within the company’s forecast range.

Kohl’s gross margin -- the percentage of sales left after subtracting the cost of goods sold -- widened to 38.57 percent from 38.45 percent, helped by sales of its own brands.

That contrasts with Cincinnati-based Macy’s, which yesterday reported third-quarter gross margin that shrank more than analysts projected as higher cotton prices and wages raised the cost of apparel and home textiles, sending the shares down 5.3 percent. The second-largest department-store chain also increased its full-year forecast to $2.70 to $2.75 a share, up from a previous prediction of as much as $2.65.

The most recent weekly Bloomberg Consumer Comfort Index released today shows consumers’ optimism about the economy and their own finances at a level that’s within reach of a record low.

Sears Holdings Corp. and J.C. Penney Co., No. 1 and No. 3 in the industry, are scheduled to report third-quarter earnings Nov. 17 and Nov. 14 respectively.

--Editors: Cecile Daurat, John Lear

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

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