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Kohl's (KSS) Stock Down on Q3 Earnings Miss & Slashed View

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Kohl's Corporation (KSS - Free Report) reported dismal third-quarter fiscal 2019 results, as both top and bottom lines fell short of the Zacks Consensus Estimate. In fact, revenues marked its third consecutive miss. Further, management lowered its earnings guidance for the fiscal.

Clearly, the lackluster performance weighed on investors’ sentiments. Shares of the company declined more than 10% during the pre-market trading session on Nov 19.

Q3 in Detail

Kohl’s adjusted earnings of 74 cents per share missed the Zacks Consensus Estimate of 85 cents. Additionally, the bottom line declined 24.5% on a year-over-year basis. The downside can be accountable to soft revenues, reduced gross margin and increased SG&A expenses.

Kohl's Corporation Price, Consensus and EPS Surprise

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 $4,625 million compared with $4,628 million in the prior-year period. Moreover, the figure came below the Zacks Consensus Estimate of $4,668 million. Net sales dipped 0.3% to $4,358 million, while other revenues grew 3.1% to $267 million in the quarter.

Further, comps rose 0.4% compared with 2.9% growth in the year-ago quarter. Nonetheless, the company reverted to growth in this quarter after posting comps decline in the preceding two quarters. Comps in the third quarter were buoyed by a solid back-to-school season. In fact, management is encouraged about holiday season opportunities and is on track to accelerate growth-oriented investments.

However, gross margin plummeted 70 basis points (bps) to 36.3% in the reported quarter. SG&A expenses, as a percentage of revenues, expanded 100 bps to 30.7%. Further, operating income came in at $204 million, down 20.9% from the prior-year quarter’s figure.

Other Financial Details

This Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $490 million, long-term debt of $1,856 million and shareholders’ equity of $5,355 million. The company generated net cash from operating activities of $1,045 million during the first nine months of fiscal 2019.

On Nov 13, Kohl’s announced a quarterly cash dividend of 67 cents per share, which is payable on Dec 24 to stockholders of record as of Dec 11.

Guidance

Kohl’s lowered its bottom-line view for fiscal 2019. It now envisions adjusted earnings per share of $4.75-$4.95, down from the previous guidance of $5.15-$5.45. The Zacks Consensus Estimate for fiscal 2019 earnings is currently pegged at $5.23 per share.

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