Kohl's Corporation (KSS - Free Report) delivered fourth-quarter fiscal 2018 results, wherein both top and bottom lines came ahead of the Zacks Consensus Estimate. The bottom line also improved year over year.
Notably, this marked the company’s seventh straight quarter of revenue beat, while earnings surpassed the consensus mark for the fifth time in a row. These factors along with management’s impressive earnings guidance for fiscal 2019 seem to have raised investors’ spirits.
Notably, shares of the company gained 5.2% in the pre-market trading session. Further, this Zacks Rank #3 (Hold) stock has increased 2.3% in the past three months, against the industry’s decline of 7%.
Well, for fiscal 2019, management expects adjusted earnings per share of $5.80-$6.15, which stands above the current Zacks Consensus Estimate of $5.70.
Q4 in Detail
Kohl’s adjusted earnings of $2.24 per share easily surpassed the Zacks Consensus Estimate of $2.17 and rallied 19.8% on a year-over-year basis. We believe that bottom-line growth was backed by lower interest expenses and decline in SG&A costs.
Total revenues came in at $6,823 million, which fell 3.3% from the prior-year quarter’s figure. Nonetheless, the figure came ahead of the Zacks Consensus Estimate of $6,780 million. Net sales also fell 3.4% to $6,535 million, while other revenues dipped 2.4% to $288 million in the quarter.
Further, comps rose 1%, against rise of 6.3% recorded in the year-ago quarter. Well, comps have been positive since the past six quarters. Comps in the quarter were fueled by solid performance in the holiday season.
Moving on, gross margin remained nearly flat at 33.5% in the reported quarter. However, operating income came in at $441 million, down from the prior-year quarter’s $567 million.
Other Financial Details
Kohl’s ended the quarter with cash and cash equivalents of $934 million, long-term debt of $1,861 million and shareholders’ equity of $5,527 million. The company generated net cash from operating activities of $2,107 million during fiscal 2018.
Also, management announced a 10% hike in its quarterly dividend, taking it to 67 cents per share. This is payable on Apr 3, 2019, to shareholders of record as on Mar 20. Additionally, Kohl’s intends to repurchase shares worth $400-$500 million in fiscal 2019.
Kohl’s inaugurated one store and relocated two in fiscal 2018. The company concluded the fiscal with 1,159 stores spread across 49 states.
Other Developments & Guidance
Kohl’s intends to shut down underperforming outlets this April and inaugurate four small-format outlets later this fiscal. The company is on track to consolidate its call centers that support the company’s online and Kohl’s Charge customers.
These factors along with some actions related to employee’s retirement program are likely to result in annual SG&A savings of nearly $20 million. Further, these actions are expected to result in deprecation savings of roughly $5 million.
However, these moves are expected to result in pre-tax charges of about $50-$55 million in the first quarter of fiscal 2019.
Management is focusing on boosting traffic. In fiscal 2019, the company expects comps to be flat to up 2%. Gross margin is likely to rise up to 10 basis points year over year. Further, SG&A costs are anticipated to rise 1-2%.
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Kohl's Corporation (KSS - Free Report) delivered fourth-quarter fiscal 2018 results, wherein both top and bottom lines came ahead of the Zacks Consensus Estimate. The bottom line also improved year over year.
Notably, this marked the company’s seventh straight quarter of revenue beat, while earnings surpassed the consensus mark for the fifth time in a row. These factors along with management’s impressive earnings guidance for fiscal 2019 seem to have raised investors’ spirits.
Notably, shares of the company gained 5.2% in the pre-market trading session. Further, this Zacks Rank #3 (Hold) stock has increased 2.3% in the past three months, against the industry’s decline of 7%.
Well, for fiscal 2019, management expects adjusted earnings per share of $5.80-$6.15, which stands above the current Zacks Consensus Estimate of $5.70.
Q4 in Detail
Kohl’s adjusted earnings of $2.24 per share easily surpassed the Zacks Consensus Estimate of $2.17 and rallied 19.8% on a year-over-year basis. We believe that bottom-line growth was backed by lower interest expenses and decline in SG&A costs.
Total revenues came in at $6,823 million, which fell 3.3% from the prior-year quarter’s figure. Nonetheless, the figure came ahead of the Zacks Consensus Estimate of $6,780 million. Net sales also fell 3.4% to $6,535 million, while other revenues dipped 2.4% to $288 million in the quarter.
Further, comps rose 1%, against rise of 6.3% recorded in the year-ago quarter. Well, comps have been positive since the past six quarters. Comps in the quarter were fueled by solid performance in the holiday season.
Moving on, gross margin remained nearly flat at 33.5% in the reported quarter. However, operating income came in at $441 million, down from the prior-year quarter’s $567 million.
Other Financial Details
Kohl’s ended the quarter with cash and cash equivalents of $934 million, long-term debt of $1,861 million and shareholders’ equity of $5,527 million. The company generated net cash from operating activities of $2,107 million during fiscal 2018.
Also, management announced a 10% hike in its quarterly dividend, taking it to 67 cents per share. This is payable on Apr 3, 2019, to shareholders of record as on Mar 20. Additionally, Kohl’s intends to repurchase shares worth $400-$500 million in fiscal 2019.
Kohl’s inaugurated one store and relocated two in fiscal 2018. The company concluded the fiscal with 1,159 stores spread across 49 states.
Other Developments & Guidance
Kohl’s intends to shut down underperforming outlets this April and inaugurate four small-format outlets later this fiscal. The company is on track to consolidate its call centers that support the company’s online and Kohl’s Charge customers.
These factors along with some actions related to employee’s retirement program are likely to result in annual SG&A savings of nearly $20 million. Further, these actions are expected to result in deprecation savings of roughly $5 million.
However, these moves are expected to result in pre-tax charges of about $50-$55 million in the first quarter of fiscal 2019.
Management is focusing on boosting traffic. In fiscal 2019, the company expects comps to be flat to up 2%. Gross margin is likely to rise up to 10 basis points year over year. Further, SG&A costs are anticipated to rise 1-2%.
Don’t Miss These Solid Retail Bets
Boot Barn Holdings (BOOT - Free Report) , with long-term earnings per share growth rate of 20.7%, flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Walmart (WMT - Free Report) , with a Zacks Rank #2 (Buy), has long-term earnings per share growth rate of 5.3%.
Dollar Tree (DLTR - Free Report) , another Zacks #2 Ranked stock, has long-term earnings per share growth rate of 13.8%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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