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Kohl's (KSS) Q4 Earnings Beat Estimates, Sales Down Y/Y
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Retailer Kohl’s Corporation (KSS - Free Report) delivered better-than-expected earnings in fourth quarter of fiscal 2016. Revenues were in line with the Zacks consensus mark. Shares were up 3.16% in pre-market trading.
Kohl’s reported adjusted earnings of $1.44 per share, beating the Zacks Consensus Estimate of $1.32 by 9.1%. Earnings however declined 9% from the prior-year quarter due to lower top line and margins.
Kohl's Corporation Price, Consensus and EPS Surprise
Net sales of $6.205 billion were in line with the Zacks Consensus Estimate of $6.200 billion. However, it declined 2.8% from the prior-year quarter due to a challenging sales environment and lower comparable store sales (comps).
Comps dropped 2.2% in the fourth quarter, wider than the preceding quarter’s decline of 1.7%. This signals that the company’s strategic initiative Greatness Agenda is failing to deliver results. The initiative, which commenced in first quarter of 2014, was designed to increase transactions per store and sales. Though the plan has helped the company to deliver positive comps in all the four quarters of fiscal 2015, the quarterly growth rates improved gradually, thus posing a concern. Moreover, comps declined in all the four quarters of fiscal 2016.
We note that Kohl’s has been struggling since the past many quarters to boost its sluggish top line. Lower spending on apparel and accessories and a general slowdown in consumer spending are hurting sales at department stores. Kohl's and its competitors have also been facing a tougher market with more competition from online retailers.
The sluggish trend is also reflected in Kohl’s share prices over the past three years due to a challenging sales environment and soft comparable store sales. Notably, in the said period the stock declined 19.6% in comparison to the Zacks categorized Retail-Wholesale sector, which showcased growth of 23.3%.
Gross margin increased 33 basis points to 33.4% in the reported quarter. Operating margin also declined 85 basis points to 7.62% due to higher selling, general and administrative expenses.
Other Financial Details
As of Jan 28, Kohl’s had $1.074 billion of cash and cash equivalents compared with $597 million in the preceding quarter. The company ended the quarter with long-term debt of $2.79 billion, flat sequentially.
On Feb 22, Kohl's board hiked its quarterly cash dividend by 10% to 55 cents per share. The new dividend will be paid on Mar 22, to shareholders of record at the close of business on Mar 8.
Kohl’s ended the year with 1,154 Kohl's stores in 49 states. During the year, it opened nine small format Kohl's stores, two Off/Aisle locations and opened 12 FILA outlets. It also closed 19 Kohl's stores.
Fiscal 2016 Results
In fiscal 2016, adjusted earnings were $3.76 per share, beating the Zacks Consensus Estimate of $3.63 by 3.6%. Earnings however declined 6% from the prior-year. It was also below the company’s guidance range of $3.80−$4.00 per share.
Net sales of $18.686 billion were in line with the Zacks Consensus Estimate of $18.684 billion. Sales, however, declined 2.7% from the prior-year due to 2.4% decline in comps.
Fiscal 2017 Outlook
For fiscal 2017, management expects earnings in the range of $3.50−$3.80 per share. Sales are expected in the range of -1.3% to 0.7%, which includes sales of approximately $160 million in the 53rd week. Comparable sales are expected in the range of -2% to flat.
While Francesca's Holdings has expected long-term earnings growth of 13.75%, Zumiez and Genesco have expected long-term earnings growth of 15.0% and 9.5%, respectively, for the next three to five years.
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Kohl's (KSS) Q4 Earnings Beat Estimates, Sales Down Y/Y
Retailer Kohl’s Corporation (KSS - Free Report) delivered better-than-expected earnings in fourth quarter of fiscal 2016. Revenues were in line with the Zacks consensus mark. Shares were up 3.16% in pre-market trading.
Kohl’s reported adjusted earnings of $1.44 per share, beating the Zacks Consensus Estimate of $1.32 by 9.1%. Earnings however declined 9% from the prior-year quarter due to lower top line and margins.
Kohl's Corporation Price, Consensus and EPS Surprise
Kohl's Corporation Price, Consensus and EPS Surprise | Kohl's Corporation Quote
Sales and Margins
Net sales of $6.205 billion were in line with the Zacks Consensus Estimate of $6.200 billion. However, it declined 2.8% from the prior-year quarter due to a challenging sales environment and lower comparable store sales (comps).
Comps dropped 2.2% in the fourth quarter, wider than the preceding quarter’s decline of 1.7%. This signals that the company’s strategic initiative Greatness Agenda is failing to deliver results. The initiative, which commenced in first quarter of 2014, was designed to increase transactions per store and sales. Though the plan has helped the company to deliver positive comps in all the four quarters of fiscal 2015, the quarterly growth rates improved gradually, thus posing a concern. Moreover, comps declined in all the four quarters of fiscal 2016.
We note that Kohl’s has been struggling since the past many quarters to boost its sluggish top line. Lower spending on apparel and accessories and a general slowdown in consumer spending are hurting sales at department stores. Kohl's and its competitors have also been facing a tougher market with more competition from online retailers.
The sluggish trend is also reflected in Kohl’s share prices over the past three years due to a challenging sales environment and soft comparable store sales. Notably, in the said period the stock declined 19.6% in comparison to the Zacks categorized Retail-Wholesale sector, which showcased growth of 23.3%.
Gross margin increased 33 basis points to 33.4% in the reported quarter. Operating margin also declined 85 basis points to 7.62% due to higher selling, general and administrative expenses.
Other Financial Details
As of Jan 28, Kohl’s had $1.074 billion of cash and cash equivalents compared with $597 million in the preceding quarter. The company ended the quarter with long-term debt of $2.79 billion, flat sequentially.
On Feb 22, Kohl's board hiked its quarterly cash dividend by 10% to 55 cents per share. The new dividend will be paid on Mar 22, to shareholders of record at the close of business on Mar 8.
Kohl’s ended the year with 1,154 Kohl's stores in 49 states. During the year, it opened nine small format Kohl's stores, two Off/Aisle locations and opened 12 FILA outlets. It also closed 19 Kohl's stores.
Fiscal 2016 Results
In fiscal 2016, adjusted earnings were $3.76 per share, beating the Zacks Consensus Estimate of $3.63 by 3.6%. Earnings however declined 6% from the prior-year. It was also below the company’s guidance range of $3.80−$4.00 per share.
Net sales of $18.686 billion were in line with the Zacks Consensus Estimate of $18.684 billion. Sales, however, declined 2.7% from the prior-year due to 2.4% decline in comps.
Fiscal 2017 Outlook
For fiscal 2017, management expects earnings in the range of $3.50−$3.80 per share. Sales are expected in the range of -1.3% to 0.7%, which includes sales of approximately $160 million in the 53rd week. Comparable sales are expected in the range of -2% to flat.
Zacks Rank & Key Picks
Kohl’s has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the retail sector are Francesca's Holdings Corporation , Zumiez, Inc. (ZUMZ - Free Report) and Genesco Inc. (GCO - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
While Francesca's Holdings has expected long-term earnings growth of 13.75%, Zumiez and Genesco have expected long-term earnings growth of 15.0% and 9.5%, respectively, for the next three to five years.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>