Kohl's Corporation (NYSE:KSS) Quarterly Earnings Preview

Kohl’s (NYSE:KSS) reported a narrower-than-expected loss for Q1, with adjusted EPS of -$0.13 versus the -$0.47 analysts anticipated. Revenue fell 4.1% year-over-year to $3 billion but still edged past the $2.99 billion estimate. Comparable sales declined 3.9%.

Despite weaker sales, profitability improved: gross margin rose 37 basis points to 39.9%, and operating income increased to $60 million from $43 million a year ago.

But the company's full-year guidance fell short of expectations. Kohl’s reiterated its fiscal 2025 EPS outlook of $0.10–$0.60, below the $0.67 consensus, and maintained projections for a 5–7% drop in net sales and a 4–6% decline in comparable sales.

UBS has reaffirmed its Sell rating on Kohl’s (NYSE:KSS) and maintained a $5.00 price target, signaling continued skepticism about the retailer’s turnaround efforts. The company’s shares saw a 24% plunge intra-day today following the company’s announcement on store closure plans.

Following a recent meeting with company leadership, UBS acknowledged management's urgency and early moves to spark growth. However, the firm expressed doubts that these steps will be sufficient to stem market share losses, especially to more competitive segments like off-price retailers.

UBS remains concerned about Kohl’s ongoing struggles with pricing, merchandise appeal, and customer service, areas where rivals are gaining ground. Despite a refreshed strategy, the firm sees limited evidence that Kohl’s can reverse its trajectory in the near term.

Looking forward, UBS projects a 12% compound annual decline in earnings per share over the next five years, citing competitive pressures and weak fundamentals. The firm believes disappointing earnings results over the next twelve months could push shares closer to its bearish price target.

UBS has reaffirmed its Sell rating on Kohl’s (NYSE:KSS) and maintained a $5.00 price target, signaling continued skepticism about the retailer’s turnaround efforts. The company’s shares saw a 24% plunge intra-day today following the company’s announcement on store closure plans.

Following a recent meeting with company leadership, UBS acknowledged management's urgency and early moves to spark growth. However, the firm expressed doubts that these steps will be sufficient to stem market share losses, especially to more competitive segments like off-price retailers.

UBS remains concerned about Kohl’s ongoing struggles with pricing, merchandise appeal, and customer service, areas where rivals are gaining ground. Despite a refreshed strategy, the firm sees limited evidence that Kohl’s can reverse its trajectory in the near term.

Looking forward, UBS projects a 12% compound annual decline in earnings per share over the next five years, citing competitive pressures and weak fundamentals. The firm believes disappointing earnings results over the next twelve months could push shares closer to its bearish price target.

Kohl’s (NYSE:KSS) saw its stock tumble more than 24% intra-day today after issuing a weaker-than-expected profit outlook for the year, overshadowing its fourth-quarter earnings beat.

For the fourth quarter, Kohl’s reported adjusted diluted earnings per share (EPS) of $0.95, surpassing analyst expectations of $0.73. Revenue came in at $5.18 billion, aligning with consensus estimates. Gross margin also improved slightly, rising to 32.9% from 32.4% a year earlier, beating the expected 32.7%.

Despite these positive metrics, operating income fell short, coming in at $126 million compared to the projected $185.8 million. The major setback came from Kohl’s forward guidance, which significantly underwhelmed investors. The company projected diluted EPS for the year between $0.10 and $0.60, well below the $1.32 analysts had expected. Additionally, Kohl’s forecasts net sales to decline between 5% and 7%, with comparable sales expected to fall 4% to 6%, much worse than the anticipated 0.9% drop.

While Kohl’s delivered an earnings beat for the quarter, the weak full-year forecast highlighted ongoing challenges in consumer demand and sales trends, leading to a sharp sell-off in the stock.

Kohl’s (NYSE:KSS) saw its stock tumble more than 24% intra-day today after issuing a weaker-than-expected profit outlook for the year, overshadowing its fourth-quarter earnings beat.

For the fourth quarter, Kohl’s reported adjusted diluted earnings per share (EPS) of $0.95, surpassing analyst expectations of $0.73. Revenue came in at $5.18 billion, aligning with consensus estimates. Gross margin also improved slightly, rising to 32.9% from 32.4% a year earlier, beating the expected 32.7%.

Despite these positive metrics, operating income fell short, coming in at $126 million compared to the projected $185.8 million. The major setback came from Kohl’s forward guidance, which significantly underwhelmed investors. The company projected diluted EPS for the year between $0.10 and $0.60, well below the $1.32 analysts had expected. Additionally, Kohl’s forecasts net sales to decline between 5% and 7%, with comparable sales expected to fall 4% to 6%, much worse than the anticipated 0.9% drop.

While Kohl’s delivered an earnings beat for the quarter, the weak full-year forecast highlighted ongoing challenges in consumer demand and sales trends, leading to a sharp sell-off in the stock.

• Cowen & Co. adjusted its outlook on Kohl's Corporation (NYSE:KSS), moving its rating to Hold from Outperform.
• Kohl's is navigating through significant economic shifts and evolving consumer preferences in the retail sector.
• The downgrade reflects a reassessment of Kohl's ability to thrive amidst these challenges, with a closing stock price of $19.77.

On Thursday, August 29, 2024, Cowen & Co. adjusted its outlook on Kohl's Corporation (NYSE:KSS), moving its rating to Hold from Outperform. This decision indicates a shift towards a more conservative view regarding the future performance of the company. At the moment of this downgrade, Kohl's shares were observed trading at a price of $19.77, as reported by TheFly under the title "Kohl's downgraded to Hold from Buy at TD Cowen."

Kohl's, a prominent player in the retail sector, is navigating through a period marked by significant economic shifts and evolving consumer preferences. This environment demands strategic flexibility and adaptability from retailers to meet the growing consumer expectation for value deals. The downgrade by Cowen & Co. suggests a reassessment of Kohl's ability to thrive or maintain its momentum amidst these challenges.

In the broader context of the retail industry, Kohl's and its peers, including Burlington Stores, Dollar General, and Five Below, have reported varied financial results and strategic initiatives in the second quarter of 2024. These outcomes reflect each company's unique approach to addressing the dynamic retail landscape and the economic pressures influencing consumer behavior. Kohl's, in particular, has seen its stock price experience slight growth, closing at $19.77, which represents a modest increase of approximately 0.61%.

The financial performance and strategic decisions of Kohl's and its competitors underscore the complexities of the retail market. With a market capitalization of around $2.2 billion and a trading volume of 9,215,338 shares, Kohl's demonstrates resilience and a capacity to adjust to market demands. However, the downgrade by Cowen & Co. highlights the need for cautious optimism regarding the company's future prospects in a fluctuating economic environment.

As the retail sector continues to evolve, companies like Kohl's are at the forefront of adapting to consumer demands for better deals and navigating through economic fluctuations. The downgrade serves as a reminder of the ongoing challenges faced by retailers and the importance of strategic agility in sustaining growth and competitiveness in the market.