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Kohl's Corporation (KSS - Free Report) posted drab first-quarter fiscal 2024 results, with the top and bottom lines declining year over year and falling short of the Zacks Consensus Estimate. While regular price sales increased, soft clearance sales (in comparison to the year-ago period) were a downside.
Nonetheless, Kohl’s witnessed an improved gross margin and lower inventory while benefiting from stringent cost control. Management remains optimistic about its growth efforts, including Sephora, home decor, gifting, impulse purchases and an upcoming partnership with Babies “R” Us.
However, given the soft first-quarter results and the ongoing volatility in the consumer landscape, Kohl’s updated its guidance for 2024 with a more conservative approach.
Kohl's Corporation Price, Consensus and EPS Surprise
Kohl's posted a loss of 24 cents per share against earnings of 13 cents posted in the year-ago quarter. The bottom line came below the Zacks Consensus Estimate of 4 cents.
Total revenues came in at $3,382 million, down from the prior-year quarter’s level of $3,571 million. Net sales fell 5.3% year over year to $3,178 million. The Zacks Consensus Estimate for the top line was pegged at $3,540 million.
Comparable sales decreased 4.4%. Regular price sales increased year over year, showing early success in underpenetrated categories, positive trends in the Women’s business and sustained strength in Sephora. However, lower clearance sales compared to the previous year resulted in a more than 600-basis point drag on the company’s comparable sales.
Kohl's gross margin expanded 48 basis points (bps) to 39.5% in the reported quarter. We had expected the gross margin to expand 40 bps to 39.4% in the quarter under review.
SG&A expenses dropped 0.8% to $1,228 million. As a percentage of total revenues, SG&A increased 166 bps to 36.3%. Our model suggested the SG&A expense rate to expand 40 bps to 35.1%.
The company posted an operating income of $43 million, down from $98 million in the year-ago period. The operating income margin contracted by 148 bps to 1.3%.
Other Details
Kohl’s ended the quarter with cash and cash equivalents of $228 million and shareholders’ equity of $3,813 million. The company used operating cash flow of $7 million for the year ended May 4, 2024.
Management expects capital expenditures of nearly $500 million for 2024 (including the expansion of its Sephora collaboration and store-related investments).
On May 15, 2024, Kohl’s declared a quarterly cash dividend of 50 cents per share, payable on Jun 26, 2024, to shareholders of record as of Jun 12.
Guidance
Kohl’s expects net sales to decline 2-4% in 2024. Comparable sales are anticipated in the range of a 1-3% decrease. Earlier, Kohl’s expected net sales between 1% growth and a 1% decline in 2024. Comparable sales were anticipated to be flat to 2% growth.
The operating margin is likely to be 3-3.5% now compared with the earlier view of 3.6-4.1%. Finally, management envisions earnings per share to be $1.25-$1.85.
Shares of this Zacks Rank #3 (Hold) company have risen 12.5% in the past six months compared with the industry’s growth of 19.9%.
Some Solid Picks
Abercrombie & Fitch (ANF - Free Report) , a specialty retailer, currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for ANF’s current financial-year sales and earnings suggests growth of 6.4% and 24.2%, respectively, from the year-ago reported numbers. You can see the complete list of today’s Zacks #1 Rank stocks here.
Abercrombie & Fitch has a trailing four-quarter earnings surprise of around 715.6%, on average.
Macy's, Inc. (M - Free Report) , an omnichannel retail organization, currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for M’s current fiscal quarter’s earnings per share suggests growth of 7.7% from the year-ago period number.
Macy's has a trailing four-quarter earnings surprise of 57.1%, on average.
Tractor Supply (TSCO - Free Report) , a rural lifestyle retailer, currently carries a Zacks Rank #2. The Zacks Consensus Estimate for TSCO’s current financial-year sales and earnings indicates respective growth of around 3% and 2.4% from the year-ago reported number.
Tractor Supply has a trailing four-quarter earnings surprise of 2.7%, on average.
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Kohl's (KSS) Cuts View on Q1 Earnings Miss, Low Comparable Sales
Kohl's Corporation (KSS - Free Report) posted drab first-quarter fiscal 2024 results, with the top and bottom lines declining year over year and falling short of the Zacks Consensus Estimate. While regular price sales increased, soft clearance sales (in comparison to the year-ago period) were a downside.
Nonetheless, Kohl’s witnessed an improved gross margin and lower inventory while benefiting from stringent cost control. Management remains optimistic about its growth efforts, including Sephora, home decor, gifting, impulse purchases and an upcoming partnership with Babies “R” Us.
However, given the soft first-quarter results and the ongoing volatility in the consumer landscape, Kohl’s updated its guidance for 2024 with a more conservative approach.
Kohl's Corporation Price, Consensus and EPS Surprise
Kohl's Corporation price-consensus-eps-surprise-chart | Kohl's Corporation Quote
Quarter in Detail
Kohl's posted a loss of 24 cents per share against earnings of 13 cents posted in the year-ago quarter. The bottom line came below the Zacks Consensus Estimate of 4 cents.
Total revenues came in at $3,382 million, down from the prior-year quarter’s level of $3,571 million. Net sales fell 5.3% year over year to $3,178 million. The Zacks Consensus Estimate for the top line was pegged at $3,540 million.
Comparable sales decreased 4.4%. Regular price sales increased year over year, showing early success in underpenetrated categories, positive trends in the Women’s business and sustained strength in Sephora. However, lower clearance sales compared to the previous year resulted in a more than 600-basis point drag on the company’s comparable sales.
Kohl's gross margin expanded 48 basis points (bps) to 39.5% in the reported quarter. We had expected the gross margin to expand 40 bps to 39.4% in the quarter under review.
SG&A expenses dropped 0.8% to $1,228 million. As a percentage of total revenues, SG&A increased 166 bps to 36.3%. Our model suggested the SG&A expense rate to expand 40 bps to 35.1%.
The company posted an operating income of $43 million, down from $98 million in the year-ago period. The operating income margin contracted by 148 bps to 1.3%.
Other Details
Kohl’s ended the quarter with cash and cash equivalents of $228 million and shareholders’ equity of $3,813 million. The company used operating cash flow of $7 million for the year ended May 4, 2024.
Management expects capital expenditures of nearly $500 million for 2024 (including the expansion of its Sephora collaboration and store-related investments).
On May 15, 2024, Kohl’s declared a quarterly cash dividend of 50 cents per share, payable on Jun 26, 2024, to shareholders of record as of Jun 12.
Guidance
Kohl’s expects net sales to decline 2-4% in 2024. Comparable sales are anticipated in the range of a 1-3% decrease. Earlier, Kohl’s expected net sales between 1% growth and a 1% decline in 2024. Comparable sales were anticipated to be flat to 2% growth.
The operating margin is likely to be 3-3.5% now compared with the earlier view of 3.6-4.1%. Finally, management envisions earnings per share to be $1.25-$1.85.
Shares of this Zacks Rank #3 (Hold) company have risen 12.5% in the past six months compared with the industry’s growth of 19.9%.
Some Solid Picks
Abercrombie & Fitch (ANF - Free Report) , a specialty retailer, currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for ANF’s current financial-year sales and earnings suggests growth of 6.4% and 24.2%, respectively, from the year-ago reported numbers. You can see the complete list of today’s Zacks #1 Rank stocks here.
Abercrombie & Fitch has a trailing four-quarter earnings surprise of around 715.6%, on average.
Macy's, Inc. (M - Free Report) , an omnichannel retail organization, currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for M’s current fiscal quarter’s earnings per share suggests growth of 7.7% from the year-ago period number.
Macy's has a trailing four-quarter earnings surprise of 57.1%, on average.
Tractor Supply (TSCO - Free Report) , a rural lifestyle retailer, currently carries a Zacks Rank #2. The Zacks Consensus Estimate for TSCO’s current financial-year sales and earnings indicates respective growth of around 3% and 2.4% from the year-ago reported number.
Tractor Supply has a trailing four-quarter earnings surprise of 2.7%, on average.