Kohl's (KSS - Get Report) is still a believer in struggling Under Armour (UA - Get Report) . 

The mid-tier department store on Thursday reported a drop in revenue for the key holiday quarter as it continues to struggle with brick-and-mortar traffic declines and the shift to online shopping.

Kohl's shares rose initially after the report, but were recently flat at $41.76 in mid-morning trading.

The company posted adjusted earnings of $1.44 a share for the fourth quarter, exceeding analysts' estimates of $1.32 a share. Revenue of $6.21 billion was roughly in line with Wall Street's forecasts, but fell 2.8% year-over-year. Comparable-store sales slid 2.2% during the period, largely matching expectations.

"Sales results were weak for the quarter in total, driven by declines in brick and mortar traffic, and offset somewhat by strength in online demand," CEO Kevin Mansell said in a statement.

Men's was the strongest category during the fourth quarter and the full year, while accessories were the weakest in both periods, executives said on a call with analysts this morning.

Accessories have been a "drag" on the business, underperforming the most of all six business categories, Mansell said. 

During 2016, the company opened nine Kohl's stores and closed 19. Sales of national brand products were up low-single-digits for the year, with particular strength in Nike (NKE - Get Report) , Carter's (CRI - Get Report) , Levi's, Columbia Sportswear (COLM - Get Report) and Van Heusen (PVH - Get Report) . The company also saw a lift from the launch of the Apple (AAPL - Get Report) Watch in the fourth quarter. 

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Kohl's will accelerate its focus in 2017 on becoming the destination for active and wellness with the launch of Under Armour (UA - Get Report) in early March. The launch will "drive penetration even higher," Mansell said on the call, appearing to not be at all worried about Under Armour's recent high-profile struggles

Under Armour is expected to be a significant enough business in year one to add 75 basis points to 100 basis points to the company's overall comp, he said. The brand is a "massive opportunity," especially in categories such as footwear and women's and children's apparel, Kohl's said. 

Under Armour should also drive positive momentum on traffic as the brand has a younger customer, executives noted. That customer has been going elsewhere to get the brand, but now can come to Kohl's.

For fiscal 2017, the company forecasts earnings between $3.50 and $3.80 a share vs. the FactSet consensus estimate of $3.73 a share. Full-year sales are projected to range from down 1.3% to up 0.7%.

The Menomonee Falls, WI-based company also raised its quarterly dividend by 10% to 55 cents a share.

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