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Why Is Kohl's (KSS) Down 18.6% Since Last Earnings Report?
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A month has gone by since the last earnings report for Kohl's (KSS - Free Report) . Shares have lost about 18.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Kohl's due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Kohl's Q2 Earnings Top Estimates, Revenues & Comps Decline
Kohl's Corporation 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.
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.
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%.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -50.16% due to these changes.
VGM Scores
Currently, Kohl's has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Kohl's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Kohl's (KSS) Down 18.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Kohl's (KSS - Free Report) . Shares have lost about 18.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Kohl's due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Kohl's Q2 Earnings Top Estimates, Revenues & Comps Decline
Kohl's Corporation 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.
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.
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%.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -50.16% due to these changes.
VGM Scores
Currently, Kohl's has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Kohl's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.