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Why Is Kohl's (KSS) Up 17.4% Since Last Earnings Report?
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It has been about a month since the last earnings report for Kohl's (KSS - Free Report) . Shares have added about 17.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Kohl's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Kohl's Beats Q3 Earnings Estimate, Sales Down
Kohl's posted third-quarter fiscal 2023 results, wherein the top and bottom lines declined year over year. However, earnings beat the Zacks Consensus Estimate.
Results reflect the strength of the company’s expense and gross margin management, together with the progress of its strategic plans. Solid growth in Sephora and newness in gifting and home aided the performance. Kohl’s also lowered its inventory during the quarter.
Management raised the lower end of its bottom-line guidance for fiscal 2023 despite pulling down the lower end of its net sales growth guidance.
Quarter in Detail
Kohl's posted earnings of 53 cents per share compared with 82 cents reported in the year-ago period. The bottom line came much ahead of the Zacks Consensus Estimate of 34 cents.
Total revenues came in at $4,054 million, down from the prior-year quarter’s level of $4,277 million. Net sales declined 5.2% year over year to $3,843 million. The Zacks Consensus Estimate for the top line was pegged at $4,103 million. Comparable sales decreased 5.5%. We had expected a comparable sales decline of 5%.
Kohl's gross margin expanded 158 basis points (bps) to 38.9% in the reported quarter. We had expected the gross margin to expand 50 bps to 37.8% in the quarter under review.
SG&A expenses escalated by 1.9% to $1,360 million. As a percentage of total revenues, SG&A expenses rose 235 bps to 33.5%. Our model suggested an SG&A expense increase of 3.1%, with the rate expanding 260 bps to 33.8%.
The company posted an operating income of $157 million, down from $200 million in the year-ago period. The operating income margin shriveled 82 bps to 3.9%.
Other Financial Details
Kohl’s ended the quarter with cash and cash equivalents of $190 million, long-term debt of $1,638 million and shareholders’ equity of $3,751 million. The company generated operating cash flow of $379 million in the first nine months of fiscal 2023. Management expects capital expenditures toward the lower end of the $600-$650 million band for the full year 2023 (including the expansion of its Sephora collaboration and store refresh actions).
On Nov 7, 2023, Kohl’s declared a quarterly cash dividend of 50 cents per share, payable on Dec 20, 2023, to shareholders of record as of Dec 6.
Guidance
Kohl’s expects net sales to decline 2.8-4% in fiscal 2023, which includes the impact of a 53rd week (of nearly 1%). Earlier, management projected a net sales decline of 2-4%. The operating margin is still likely to be about 4%. Earnings per share (EPS), excluding non-recurring charges, are envisioned in the band of $2.30-$2.70 compared with the $2.10-$2.70 band projected earlier. The company delivered an adjusted loss of 15 cents 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 -12.12% due to these changes.
VGM Scores
Currently, Kohl's has a poor Growth Score of F, however its Momentum Score is doing a lot 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 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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.
Performance of an Industry Player
Kohl's belongs to the Zacks Retail - Regional Department Stores industry. Another stock from the same industry, Macy's (M - Free Report) , has gained 33.6% over the past month. More than a month has passed since the company reported results for the quarter ended October 2023.
Macy's reported revenues of $4.86 billion in the last reported quarter, representing a year-over-year change of -7.1%. EPS of $0.21 for the same period compares with $0.52 a year ago.
Macy's is expected to post earnings of $1.97 per share for the current quarter, representing a year-over-year change of +4.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.
Macy's has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Why Is Kohl's (KSS) Up 17.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Kohl's (KSS - Free Report) . Shares have added about 17.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Kohl's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Kohl's Beats Q3 Earnings Estimate, Sales Down
Kohl's posted third-quarter fiscal 2023 results, wherein the top and bottom lines declined year over year. However, earnings beat the Zacks Consensus Estimate.
Results reflect the strength of the company’s expense and gross margin management, together with the progress of its strategic plans. Solid growth in Sephora and newness in gifting and home aided the performance. Kohl’s also lowered its inventory during the quarter.
Management raised the lower end of its bottom-line guidance for fiscal 2023 despite pulling down the lower end of its net sales growth guidance.
Quarter in Detail
Kohl's posted earnings of 53 cents per share compared with 82 cents reported in the year-ago period. The bottom line came much ahead of the Zacks Consensus Estimate of 34 cents.
Total revenues came in at $4,054 million, down from the prior-year quarter’s level of $4,277 million. Net sales declined 5.2% year over year to $3,843 million. The Zacks Consensus Estimate for the top line was pegged at $4,103 million. Comparable sales decreased 5.5%. We had expected a comparable sales decline of 5%.
Kohl's gross margin expanded 158 basis points (bps) to 38.9% in the reported quarter. We had expected the gross margin to expand 50 bps to 37.8% in the quarter under review.
SG&A expenses escalated by 1.9% to $1,360 million. As a percentage of total revenues, SG&A expenses rose 235 bps to 33.5%. Our model suggested an SG&A expense increase of 3.1%, with the rate expanding 260 bps to 33.8%.
The company posted an operating income of $157 million, down from $200 million in the year-ago period. The operating income margin shriveled 82 bps to 3.9%.
Other Financial Details
Kohl’s ended the quarter with cash and cash equivalents of $190 million, long-term debt of $1,638 million and shareholders’ equity of $3,751 million. The company generated operating cash flow of $379 million in the first nine months of fiscal 2023. Management expects capital expenditures toward the lower end of the $600-$650 million band for the full year 2023 (including the expansion of its Sephora collaboration and store refresh actions).
On Nov 7, 2023, Kohl’s declared a quarterly cash dividend of 50 cents per share, payable on Dec 20, 2023, to shareholders of record as of Dec 6.
Guidance
Kohl’s expects net sales to decline 2.8-4% in fiscal 2023, which includes the impact of a 53rd week (of nearly 1%). Earlier, management projected a net sales decline of 2-4%. The operating margin is still likely to be about 4%. Earnings per share (EPS), excluding non-recurring charges, are envisioned in the band of $2.30-$2.70 compared with the $2.10-$2.70 band projected earlier. The company delivered an adjusted loss of 15 cents 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 -12.12% due to these changes.
VGM Scores
Currently, Kohl's has a poor Growth Score of F, however its Momentum Score is doing a lot 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 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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.
Performance of an Industry Player
Kohl's belongs to the Zacks Retail - Regional Department Stores industry. Another stock from the same industry, Macy's (M - Free Report) , has gained 33.6% over the past month. More than a month has passed since the company reported results for the quarter ended October 2023.
Macy's reported revenues of $4.86 billion in the last reported quarter, representing a year-over-year change of -7.1%. EPS of $0.21 for the same period compares with $0.52 a year ago.
Macy's is expected to post earnings of $1.97 per share for the current quarter, representing a year-over-year change of +4.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.
Macy's has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.