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Kohl's (KSS) Cuts View Despite Q2 Earnings Beat, Stock Down
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Kohl's Corporation (KSS - Free Report) posted soft second-quarter fiscal 2022 results as both the top and bottom lines declined year over year. Management slashed its overall guidance for fiscal 2022. Results were hurt by a tough macroeconomic landscape, increased inflation and sluggish consumer spending. Shares of the company fell more than 8% during the pre-market trading session on Aug 18.
Management has undertaken initiatives to alter its plans, such as reducing the inventory and cutting costs due to a weaker demand outlook. Further, the company is on track with its transformation strategy and remains encouraged about having witnessed a solid performance in its roughly 600 refreshed and elevated stores – including Sephora as an important cornerstone.
Quarter in Detail
Kohl's posted adjusted earnings of $1.11 per share, which plunged 55% from the $2.48 reported in the year-ago period. However, the bottom line came ahead of the Zacks Consensus Estimate of $1.08.
Kohl's Corporation Price, Consensus and EPS Surprise
Total revenues came in at $4,087 million, down 8.1% from the prior-year quarter’s levels. The metric exceeded the Zacks Consensus Estimate of $4,073 million. Net sales dipped 8.5% year over year to $3,863 million. Comps decreased by 7.7%.
Kohl's gross margin contracted from 42.5% to 39.6% during the reported quarter. SG&A expenses increased by 3.4% to $1,283 million. As a percentage of the total revenues, SG&A expenses expanded 350 basis points to 31.4%. The company reported an operating income of $266 million, lower than the year-ago quarter’s figure of $570 million.
Image Source: Zacks Investment Research
Other Financial Details
Kohl’s ended the quarter with cash and cash equivalents of $222 million, long-term debt of $1,747 million and shareholders’ equity of $4,544 million. KSS used net cash from operating activities of $546 million during the six-month period ended Jul 30, 2022.
On Aug 9, 2022, Kohl’s declared a quarterly cash dividend of 50 cents per share, payable on Sep 21, 2022, to shareholders of record as of Sep 7. Further, on Aug 18, the company entered into an accelerated share repurchase agreement to buy back shares worth nearly $500 million.
Guidance
Management lowered its guidance for full-year 2022. It now expects net sales to decline 5-6%. Earlier, the net sales growth was anticipated in a range of flat to 1%. The operating margin is likely to be 4.2-4.5% now, down from the previously guided range of 7-7.2%.
Kohl’s envisions earnings per share (EPS) in the range of $2.80-$3.20 (excluding non-recurring charges) compared with the earlier range of $7.45-$7.85 (excluding non-recurring charges). The company posted an adjusted EPS of $7.33 in full-year 2021.
Shares of this Zacks Rank #5 (Strong Sell) company have decreased 24.7% in the past three months compared to the industry’s growth of 0.9%.
The Zacks Consensus Estimate for Dollar General’s current financial-year revenues and EPS suggests growth of 10% and 13.4%, respectively, from the year-ago reported figure. Dollar General has a trailing four-quarter earnings surprise of 2.8%, on average.
Costco, which is engaged in the operation of membership warehouses, carries a Zacks Rank #2. COST has an expected EPS growth rate of 9.2% for three to five years.
The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS suggests growth of 15.4% and 18.2%, respectively, from the year-ago period. COST has a trailing four-quarter earnings surprise of 9.7%, on average.
Dollar Tree operates discount variety retail stores. The stock currently carries a Zacks Rank #2. DLTR has an expected EPS growth rate of 15.5% for three to five years.
The Zacks Consensus Estimate for Dollar Tree’s current financial-year revenues and EPS suggests growth of 6.7% and 40.7%, respectively, from the year-ago reported figure. DLTR has a trailing four-quarter earnings surprise of 13.1%, on average.
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Kohl's (KSS) Cuts View Despite Q2 Earnings Beat, Stock Down
Kohl's Corporation (KSS - Free Report) posted soft second-quarter fiscal 2022 results as both the top and bottom lines declined year over year. Management slashed its overall guidance for fiscal 2022. Results were hurt by a tough macroeconomic landscape, increased inflation and sluggish consumer spending. Shares of the company fell more than 8% during the pre-market trading session on Aug 18.
Management has undertaken initiatives to alter its plans, such as reducing the inventory and cutting costs due to a weaker demand outlook. Further, the company is on track with its transformation strategy and remains encouraged about having witnessed a solid performance in its roughly 600 refreshed and elevated stores – including Sephora as an important cornerstone.
Quarter in Detail
Kohl's posted adjusted earnings of $1.11 per share, which plunged 55% from the $2.48 reported in the year-ago period. However, the bottom line came ahead of the Zacks Consensus Estimate of $1.08.
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 $4,087 million, down 8.1% from the prior-year quarter’s levels. The metric exceeded the Zacks Consensus Estimate of $4,073 million. Net sales dipped 8.5% year over year to $3,863 million. Comps decreased by 7.7%.
Kohl's gross margin contracted from 42.5% to 39.6% during the reported quarter. SG&A expenses increased by 3.4% to $1,283 million. As a percentage of the total revenues, SG&A expenses expanded 350 basis points to 31.4%. The company reported an operating income of $266 million, lower than the year-ago quarter’s figure of $570 million.
Image Source: Zacks Investment Research
Other Financial Details
Kohl’s ended the quarter with cash and cash equivalents of $222 million, long-term debt of $1,747 million and shareholders’ equity of $4,544 million. KSS used net cash from operating activities of $546 million during the six-month period ended Jul 30, 2022.
On Aug 9, 2022, Kohl’s declared a quarterly cash dividend of 50 cents per share, payable on Sep 21, 2022, to shareholders of record as of Sep 7. Further, on Aug 18, the company entered into an accelerated share repurchase agreement to buy back shares worth nearly $500 million.
Guidance
Management lowered its guidance for full-year 2022. It now expects net sales to decline 5-6%. Earlier, the net sales growth was anticipated in a range of flat to 1%. The operating margin is likely to be 4.2-4.5% now, down from the previously guided range of 7-7.2%.
Kohl’s envisions earnings per share (EPS) in the range of $2.80-$3.20 (excluding non-recurring charges) compared with the earlier range of $7.45-$7.85 (excluding non-recurring charges). The company posted an adjusted EPS of $7.33 in full-year 2021.
Shares of this Zacks Rank #5 (Strong Sell) company have decreased 24.7% in the past three months compared to the industry’s growth of 0.9%.
3 Hot Stocks
Here we have highlighted three better-ranked stocks, namely Dollar General (DG - Free Report) , Costco (COST - Free Report) and Dollar Tree (DLTR - Free Report) .
Dollar General, a discount retailer, currently carries a Zacks Rank #2 (Buy). DG has an expected EPS growth rate of 12.8% for three to five years. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Dollar General’s current financial-year revenues and EPS suggests growth of 10% and 13.4%, respectively, from the year-ago reported figure. Dollar General has a trailing four-quarter earnings surprise of 2.8%, on average.
Costco, which is engaged in the operation of membership warehouses, carries a Zacks Rank #2. COST has an expected EPS growth rate of 9.2% for three to five years.
The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS suggests growth of 15.4% and 18.2%, respectively, from the year-ago period. COST has a trailing four-quarter earnings surprise of 9.7%, on average.
Dollar Tree operates discount variety retail stores. The stock currently carries a Zacks Rank #2. DLTR has an expected EPS growth rate of 15.5% for three to five years.
The Zacks Consensus Estimate for Dollar Tree’s current financial-year revenues and EPS suggests growth of 6.7% and 40.7%, respectively, from the year-ago reported figure. DLTR has a trailing four-quarter earnings surprise of 13.1%, on average.