We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Kohl's (KSS) Down 8.6% Since the Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for Kohl's Corporation (KSS - Free Report) . Shares have lost about 8.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Kohl’s Fourth-Quarter Earnings Beat Estimates, Sales Down Y/Y
Kohl’s delivered better-than-expected earnings in fourth quarter of fiscal 2016. Revenues were also in line with the Zacks consensus mark.
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.
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.
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 a decline 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 a decline of 2% to flat.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four downward revisions for the current quarter. In the past month, the consensus estimate also shifted downward by 22.3% due to these changes.
At this time, Kohl's stock has a strong Growth Score of 'A', though it is lagging a bit on the momentum front with a 'C'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and growth investors while momentum investors may want to look elsewhere.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Kohl's (KSS) Down 8.6% Since the Last Earnings Report?
A month has gone by since the last earnings report for Kohl's Corporation (KSS - Free Report) . Shares have lost about 8.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Kohl’s Fourth-Quarter Earnings Beat Estimates, Sales Down Y/Y
Kohl’s delivered better-than-expected earnings in fourth quarter of fiscal 2016. Revenues were also in line with the Zacks consensus mark.
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.
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.
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 a decline 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 a decline of 2% to flat.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four downward revisions for the current quarter. In the past month, the consensus estimate also shifted downward by 22.3% due to these changes.
Kohl's Corporation Price and Consensus
Kohl's Corporation Price and Consensus | Kohl's Corporation Quote
VGM Scores
At this time, Kohl's stock has a strong Growth Score of 'A', though it is lagging a bit on the momentum front with a 'C'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and growth investors while momentum investors may want to look elsewhere.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.