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Kohl's (KSS) Q2 Earnings Top Estimates, Revenues & Comps Decline
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Kohl's Corporation (KSS - Free Report) posted second-quarter fiscal 2023 results, wherein the bottom line came ahead of the Zacks Consensus Estimate while declining year over year. Additionally, the top line came in lower than the year-ago period.
However, Sephora at Kohl’s continued witnessing solid sales momentum. Management stated that it recently introduced another 200 Sephora at Kohl’s shops, thereby enriching the store experience. Kohl’s lowered inventory and benefited from strict expense management during the quarter. Management remains confident about its strategic initiatives for the latter half of 2023 as well as 2024 and ahead.
All said, management reiterated its guidance for the full-year 2023.
Quarter in Detail
Kohl's posted earnings of 52 cents per share compared with $1.11 reported in the year-ago period. The bottom line came much ahead of the Zacks Consensus Estimate of 24 cents.
Kohl's Corporation Price, Consensus and EPS Surprise
Total revenues came in at $3,895 million, down from the prior-year quarter’s level of $4,087 million. The Zacks Consensus Estimate was pegged at $3,904 million. Net sales declined 4.8% year over year to $3,678 million.
Comparable sales or comps decreased by 5%, in line with our estimate.
Kohl's gross margin contracted 61 basis points (bps) to 39% in the reported quarter. We had expected the gross margin to be 37.5% in the second quarter.
SG&A expenses escalated by 1.6% to $1,304 million. As a percentage of total revenues, SG&A expenses rose 208 bps to 33.5% compared with our estimate of 34%.
The company posted an operating income of $163 million, down from $266 million in the year-ago period. The operating income margin shriveled 233 bps to 4.2%.
Other Financial Details
Kohl’s ended the quarter with cash and cash equivalents of $204 million, long-term debt of $1,637 million and shareholders’ equity of $3,735 million. The company generated operating cash flow of $430 million in the second quarter.
Management expects capital expenditures in the band of $600-$650 million in the full-year 2023 (including the expansion of its Sephora collaboration and store refresh actions).
On Aug 3, 2023, Kohl’s declared a quarterly cash dividend of 50 cents per share, payable on Sep 20, 2023, to shareholders of record as of Sep 6.
Guidance
Kohl’s reiterated its guidance for the full-year 2023. The company expects net sales to decline 2-4%, which includes the impact of a 53rd week. The operating margin is likely to be about 4%.
Earnings per share (EPS), excluding non-recurring charges, are envisioned in the band of $2.10-$2.70 compared to the adjusted loss of 15 cents reported in fiscal 2022.
Shares of this Zacks Rank #3 (Hold) company have rallied 25.1% in the past three months compared with the industry’s growth of 13.8%.
Some Solid Picks
Here we have highlighted three better-ranked stocks.
The Zacks Consensus Estimate for Kroger’s current financial-year EPS suggests an increase of 2.2% from the year-ago reported figure. Kroger has a trailing four-quarter negative earnings surprise of 7.8%, on average.
Ross Stores (ROST - Free Report) currently carries a Zacks Rank #2. This off-price retailer has an expected EPS growth rate of 11.3% for three to five years.
The Zacks Consensus Estimate for Ross Stores’ current financial-year EPS suggests growth of 13.5% from the year-ago reported figure. ROST has a trailing four-quarter negative earnings surprise of 11.5%, on average.
The TJX Companies (TJX - Free Report) has an expected EPS growth rate of 10.8% for three to five years. This off-price retailer holds a Zacks Rank #2 at present.
The Zacks Consensus Estimate for The TJX Companies’ current financial-year EPS suggests growth of 15.4% from the year-ago reported figure. TJX has a trailing four-quarter earnings surprise of 6.6%, on average.
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Kohl's (KSS) Q2 Earnings Top Estimates, Revenues & Comps Decline
Kohl's Corporation (KSS - Free Report) posted second-quarter fiscal 2023 results, wherein the bottom line came ahead of the Zacks Consensus Estimate while declining year over year. Additionally, the top line came in lower than the year-ago period.
However, Sephora at Kohl’s continued witnessing solid sales momentum. Management stated that it recently introduced another 200 Sephora at Kohl’s shops, thereby enriching the store experience. Kohl’s lowered inventory and benefited from strict expense management during the quarter. Management remains confident about its strategic initiatives for the latter half of 2023 as well as 2024 and ahead.
All said, management reiterated its guidance for the full-year 2023.
Quarter in Detail
Kohl's posted earnings of 52 cents per share compared with $1.11 reported in the year-ago period. The bottom line came much ahead of the Zacks Consensus Estimate of 24 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 $3,895 million, down from the prior-year quarter’s level of $4,087 million. The Zacks Consensus Estimate was pegged at $3,904 million. Net sales declined 4.8% year over year to $3,678 million.
Comparable sales or comps decreased by 5%, in line with our estimate.
Kohl's gross margin contracted 61 basis points (bps) to 39% in the reported quarter. We had expected the gross margin to be 37.5% in the second quarter.
SG&A expenses escalated by 1.6% to $1,304 million. As a percentage of total revenues, SG&A expenses rose 208 bps to 33.5% compared with our estimate of 34%.
The company posted an operating income of $163 million, down from $266 million in the year-ago period. The operating income margin shriveled 233 bps to 4.2%.
Other Financial Details
Kohl’s ended the quarter with cash and cash equivalents of $204 million, long-term debt of $1,637 million and shareholders’ equity of $3,735 million. The company generated operating cash flow of $430 million in the second quarter.
Management expects capital expenditures in the band of $600-$650 million in the full-year 2023 (including the expansion of its Sephora collaboration and store refresh actions).
On Aug 3, 2023, Kohl’s declared a quarterly cash dividend of 50 cents per share, payable on Sep 20, 2023, to shareholders of record as of Sep 6.
Guidance
Kohl’s reiterated its guidance for the full-year 2023. The company expects net sales to decline 2-4%, which includes the impact of a 53rd week. The operating margin is likely to be about 4%.
Earnings per share (EPS), excluding non-recurring charges, are envisioned in the band of $2.10-$2.70 compared to the adjusted loss of 15 cents reported in fiscal 2022.
Shares of this Zacks Rank #3 (Hold) company have rallied 25.1% in the past three months compared with the industry’s growth of 13.8%.
Some Solid Picks
Here we have highlighted three better-ranked stocks.
Kroger (KR - Free Report) , a renowned grocery retailer, currently carries a Zacks Rank #2 (Buy). KR has an EPS growth rate of 5.8% 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 Kroger’s current financial-year EPS suggests an increase of 2.2% from the year-ago reported figure. Kroger has a trailing four-quarter negative earnings surprise of 7.8%, on average.
Ross Stores (ROST - Free Report) currently carries a Zacks Rank #2. This off-price retailer has an expected EPS growth rate of 11.3% for three to five years.
The Zacks Consensus Estimate for Ross Stores’ current financial-year EPS suggests growth of 13.5% from the year-ago reported figure. ROST has a trailing four-quarter negative earnings surprise of 11.5%, on average.
The TJX Companies (TJX - Free Report) has an expected EPS growth rate of 10.8% for three to five years. This off-price retailer holds a Zacks Rank #2 at present.
The Zacks Consensus Estimate for The TJX Companies’ current financial-year EPS suggests growth of 15.4% from the year-ago reported figure. TJX has a trailing four-quarter earnings surprise of 6.6%, on average.