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Kohl's (KSS) Stock Down on Q1 Earnings Miss, Lowered View
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Kohl's Corporation (KSS - Free Report) lowered its guidance for full-year 2022 on dismal results in the first quarter, wherein the top and bottom lines declined year over year and fell short of the Zacks Consensus Estimate. While the quarter began on a solid note, sales significantly weakened in April as the company faced tough comparisons with the year-ago period, which benefited from stimulus. Also, an inflationary consumer landscape in the quarter under review hurt sales. Shares of the company fell more than 6% during the pre-market trading session on May 19.
However, management remains focused on its long-term plan and is encouraged about its updated stores (with Sephora at Kohl’s shops) generating positive comparable store sales (comps) in 200 of these locations. Management expects continued business growth in the second half as it gains from the roll out of another 400 stores, more store investments and improved loyalty rewards.
Management is meticulously testing Kohl’s standalone strategic plan against probable alternatives. It also appointed its Finance Committee to head the ongoing process of assessing expressions of interest.
Quarter in Detail
Kohl's posted adjusted earnings of 11 cents per share, which plunged 90% from the $1.05 reported in the year-ago period. The bottom line came way below the Zacks Consensus Estimate of 75 cents.
Kohl's Corporation Price, Consensus and EPS Surprise
Total revenues came in at $3,715 million, down 4.4% from the prior-year quarter’s levels. The metric fell short of the Zacks Consensus Estimate of $3,854 million. Net sales dipped 5.2% in the quarter to $3,471 million. Comps also decreased by 5.2%.
Kohl's gross margin contracted from 39% to 38.3% during the reported quarter. SG&A expenses increased by 10.5% to $1,293 million. As a percentage of the total revenues, SG&A expenses expanded 470 basis points to 34.8%. The company reported an operating income of $82 million, lower than the year-ago quarter’s figure of $273 million.
Other Financial Details
Kohl’s ended the quarter with cash and cash equivalents of $646 million, long-term debt of $164 million and shareholders’ equity of $4,456 million. KSS used net cash from operating activities of $460 million during the three-month period ended Apr 30, 2022.
On May 10, 2022, Kohl’s declared a quarterly cash dividend of 50 cents per share, payable on Jun 22, 2022 to shareholders of record as of Jun 8.
On its fourth-quarter fiscal 2021 earnings call, the company projected capital expenditures of about $850 million for the full year of 2022, which includes the expansion of its Sephora tie-up and store refurbishment actions.
Guidance
Management lowered its guidance for full-year 2022. It now expects net sales growth of flat to 1%. The operating margin is likely to be 7-7.2%. Kohl’s envisions earnings per share (EPS) in the range of $7.45-$7.85 (excluding non-recurring charges). The company posted an adjusted EPS of $7.33 in full-year 2021. Earlier, management expected net sales to grow 2-3%. The operating margin was anticipated at 7.2-7.5% and the EPS was guided in the range of $7.00-$7.50 (excluding non-recurring charges).
Shares of this Zacks Rank #3 (Hold) company have decreased 24.6% in the past three months compared with the industry’s decline of 4.5%.
Dillard's, which operates retail department stores, sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 224.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dillard's current financial-year sales suggests growth of 6.1% from the year-ago period. DDS has an expected EPS growth rate of 14.6% for three to five years.
Kroger, a renowned supermarket company, carries a Zacks Rank #2 (Buy). The company has an expected EPS growth rate of 9.9% for three to five years.
The Zacks Consensus Estimate for Kroger’s current financial-year sales suggests growth of 3.2% from the year-ago period. KR has a trailing four-quarter earnings surprise of 22.1%, on average.
Costco, the operator of membership warehouses, holds a Zacks Rank #2. Costco has a trailing four-quarter earnings surprise of 13.3%, on average. The company has an expected EPS growth rate of 9.1% for three to five years.
The Zacks Consensus Estimate for COST’s current financial-year sales suggests growth of nearly 14% from the year-ago period.
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Kohl's (KSS) Stock Down on Q1 Earnings Miss, Lowered View
Kohl's Corporation (KSS - Free Report) lowered its guidance for full-year 2022 on dismal results in the first quarter, wherein the top and bottom lines declined year over year and fell short of the Zacks Consensus Estimate. While the quarter began on a solid note, sales significantly weakened in April as the company faced tough comparisons with the year-ago period, which benefited from stimulus. Also, an inflationary consumer landscape in the quarter under review hurt sales. Shares of the company fell more than 6% during the pre-market trading session on May 19.
However, management remains focused on its long-term plan and is encouraged about its updated stores (with Sephora at Kohl’s shops) generating positive comparable store sales (comps) in 200 of these locations. Management expects continued business growth in the second half as it gains from the roll out of another 400 stores, more store investments and improved loyalty rewards.
Management is meticulously testing Kohl’s standalone strategic plan against probable alternatives. It also appointed its Finance Committee to head the ongoing process of assessing expressions of interest.
Quarter in Detail
Kohl's posted adjusted earnings of 11 cents per share, which plunged 90% from the $1.05 reported in the year-ago period. The bottom line came way below the Zacks Consensus Estimate of 75 cents.
Kohl's Corporation Price, Consensus and EPS Surprise
Kohl's Corporation price-consensus-eps-surprise-chart | Kohl's Corporation Quote
Total revenues came in at $3,715 million, down 4.4% from the prior-year quarter’s levels. The metric fell short of the Zacks Consensus Estimate of $3,854 million. Net sales dipped 5.2% in the quarter to $3,471 million. Comps also decreased by 5.2%.
Kohl's gross margin contracted from 39% to 38.3% during the reported quarter. SG&A expenses increased by 10.5% to $1,293 million. As a percentage of the total revenues, SG&A expenses expanded 470 basis points to 34.8%. The company reported an operating income of $82 million, lower than the year-ago quarter’s figure of $273 million.
Other Financial Details
Kohl’s ended the quarter with cash and cash equivalents of $646 million, long-term debt of $164 million and shareholders’ equity of $4,456 million. KSS used net cash from operating activities of $460 million during the three-month period ended Apr 30, 2022.
On May 10, 2022, Kohl’s declared a quarterly cash dividend of 50 cents per share, payable on Jun 22, 2022 to shareholders of record as of Jun 8.
On its fourth-quarter fiscal 2021 earnings call, the company projected capital expenditures of about $850 million for the full year of 2022, which includes the expansion of its Sephora tie-up and store refurbishment actions.
Guidance
Management lowered its guidance for full-year 2022. It now expects net sales growth of flat to 1%. The operating margin is likely to be 7-7.2%. Kohl’s envisions earnings per share (EPS) in the range of $7.45-$7.85 (excluding non-recurring charges). The company posted an adjusted EPS of $7.33 in full-year 2021. Earlier, management expected net sales to grow 2-3%. The operating margin was anticipated at 7.2-7.5% and the EPS was guided in the range of $7.00-$7.50 (excluding non-recurring charges).
Shares of this Zacks Rank #3 (Hold) company have decreased 24.6% in the past three months compared with the industry’s decline of 4.5%.
3 Retail Stocks for You
Here are three better-ranked stocks – Dillard's, Inc. (DDS - Free Report) , The Kroger Co. (KR - Free Report) and Costco Wholesale Corporation (COST - Free Report) .
Dillard's, which operates retail department stores, sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 224.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dillard's current financial-year sales suggests growth of 6.1% from the year-ago period. DDS has an expected EPS growth rate of 14.6% for three to five years.
Kroger, a renowned supermarket company, carries a Zacks Rank #2 (Buy). The company has an expected EPS growth rate of 9.9% for three to five years.
The Zacks Consensus Estimate for Kroger’s current financial-year sales suggests growth of 3.2% from the year-ago period. KR has a trailing four-quarter earnings surprise of 22.1%, on average.
Costco, the operator of membership warehouses, holds a Zacks Rank #2. Costco has a trailing four-quarter earnings surprise of 13.3%, on average. The company has an expected EPS growth rate of 9.1% for three to five years.
The Zacks Consensus Estimate for COST’s current financial-year sales suggests growth of nearly 14% from the year-ago period.