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Kohl's (KSS) Comps Still Sluggish: Should Investors Worry?
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Kohl’s Corp. (KSS - Free Report) appears to be struggling due to sluggish comparable store sales (''comps'') amid a challenging retail environment in the U.S.
The Zacks Rank #3 (Hold) stock has a long-term earnings growth rate of 8.75% and a VGM score of A, which signals that it has strong fundamentals and long-term growth prospects. However, the company is not performing quite well over the past few quarters due to weak comps. Also, its shares have plummeted nearly 14% year-to-date.
Sluggish Comps
Estimates have been declining over the past 30 days period since Kohl’s reported second-quarter fiscal 2016 results last month. Despite posting better-than-expected earnings and revenues in the quarter, Kohl’s slashed its fiscal 2016 earnings view due to sluggish comps and a difficult sales scenario.
Kohl’s turnaround initiative named “Greatness Agenda” is showing signs of weakness lately. The initiative, which began in the first quarter of 2014, was designed to increase transactions per store and sales. Though this initiative helped the company to deliver positive comps through fiscal 2015, the quarterly growth rates moderated gradually. Moreover, comps declined in the first two quarters of fiscal 2016, which remains a concern over the near term.
We note that Kohl’s is struggling since the past many quarters to boost its sluggish top line. Lower spending on apparel, dwindling store traffic, competition from discount retailers and online retailers like Amazon.com, Inc. (AMZN - Free Report) and cautious consumer spending are hurting sales at department stores. Steady migration of sales to online platforms is also hurting store sales. Kohl’s remains cautious about its fiscal 2016 results and plans to close 18 stores due to retail uncertainty as well as careful spending by U.S. consumers.
Higher inventory levels and operating expenses are also impacting the company’s margins. In addition, unanticipated expenses related to its e-commerce business are adding to its already high input costs.
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Kohl's (KSS) Comps Still Sluggish: Should Investors Worry?
Kohl’s Corp. (KSS - Free Report) appears to be struggling due to sluggish comparable store sales (''comps'') amid a challenging retail environment in the U.S.
The Zacks Rank #3 (Hold) stock has a long-term earnings growth rate of 8.75% and a VGM score of A, which signals that it has strong fundamentals and long-term growth prospects. However, the company is not performing quite well over the past few quarters due to weak comps. Also, its shares have plummeted nearly 14% year-to-date.
Sluggish Comps
Estimates have been declining over the past 30 days period since Kohl’s reported second-quarter fiscal 2016 results last month. Despite posting better-than-expected earnings and revenues in the quarter, Kohl’s slashed its fiscal 2016 earnings view due to sluggish comps and a difficult sales scenario.
Kohl’s turnaround initiative named “Greatness Agenda” is showing signs of weakness lately. The initiative, which began in the first quarter of 2014, was designed to increase transactions per store and sales. Though this initiative helped the company to deliver positive comps through fiscal 2015, the quarterly growth rates moderated gradually. Moreover, comps declined in the first two quarters of fiscal 2016, which remains a concern over the near term.
KOHLS CORP Price, Consensus and EPS Surprise
KOHLS CORP Price, Consensus and EPS Surprise | KOHLS CORP Quote
Difficult Retail Environment
We note that Kohl’s is struggling since the past many quarters to boost its sluggish top line. Lower spending on apparel, dwindling store traffic, competition from discount retailers and online retailers like Amazon.com, Inc. (AMZN - Free Report) and cautious consumer spending are hurting sales at department stores. Steady migration of sales to online platforms is also hurting store sales. Kohl’s remains cautious about its fiscal 2016 results and plans to close 18 stores due to retail uncertainty as well as careful spending by U.S. consumers.
Higher inventory levels and operating expenses are also impacting the company’s margins. In addition, unanticipated expenses related to its e-commerce business are adding to its already high input costs.
However, retail stocks that are currently doing well include J.C. Penny Company, Inc. and Macy’s, Inc. (M - Free Report) . Both the stocks hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>