Vehicles stand in front of a Kohl’s department store in Ashland, Ky.
Luke Sharrett | Bloomberg | Getty Images
Kohl’s shares fell Thursday, despite the company’s first-quarter earnings and sales that beat expectations and exceeded guidance for the full year.
It indicated additional costs and headwinds in the supply chain it could face later in 2021 as it bounced back from a decline in buyer demand a year earlier, but the uncertainty is great. Kohl’s share closed around 10% on Thursday.
Stocks followed a similar trend as Walmart and Lowe’s, both of which reported strong earnings results earlier in the week and then lost momentum in their stocks as the day progressed. Some investors are wary of how long the fervent demand from the pandemic will last, especially with stimulus checks being done.
Macy’s shares also rose on positive results released Tuesday and signs of shoppers returning to stores for clothes and luggage, but closed the day.
According to Neil Saunders, Managing Director of GlobalData Retail, Kohl’s results are not as strong compared to pre-Covid pandemic either.
“Given last year’s dire results, good growth has always been inevitable,” Saunders said of Kohl’s time his stores closed during the health crisis. “While the company is on a steep recovery path, it hasn’t completely dug its way out of the hole that caused the pandemic.”
Here’s how Kohl’s developed for the quarter ending May 1, compared to analyst expectations based on a refinitive survey:
- Earnings per share: $ 1.05 adjusted versus 4 cents expected
- Revenue: $ 3.89 billion versus $ 3.48 billion expected
Kohl’s net income rose from a loss of $ 541 million, or $ 3.52 per share last year, to $ 14 million, or 9 cents per share. Without one-off adjustments, the company made $ 1.05 per share, beating expectations for 4 cents in Refinitiv’s survey.
Revenue increased nearly 70% from $ 2.43 billion a year ago to $ 3.89 billion. That exceeded expectations for $ 3.48 billion.
The company announced that in-store sales more than doubled in the quarter, while digital sales were up 14% year over year, representing 30% of total sales. No sales figures have been published for the same store.
Michelle Gass, executive director of Kohl, said the momentum had increased throughout the quarter, particularly in stores where the retailer had invested in new private labels and refreshing displays for active wear, womenswear and beauty. According to Gass, activewear sales saw the most significant growth in the first quarter, increasing by a percentage by mid-teens from 2019.
“The US consumer is in a stronger position [and] Spending has spiked, fueled by incentives, easing Covid-19 restrictions and resuming normalcy in their daily lives, “Gass said during an earnings call.” These factors are helping to reinvigorate retail growth and we are extremely well positioned to benefit from this acceleration. “
Kohl’s expects adjusted earnings per share between $ 3.80 and $ 4.20 and between $ 2.45 and $ 2.95 for the full year.
Net sales are estimated to increase in the mid to high teen percentage range compared to the previous expectation of a percentage increase in middle teenagers.
Analysts had been looking for adjusted earnings of $ 3.15 per share, with revenue up 19.3% over the year, according to Refinitiv.
Telsey Advisory Group’s research analyst Dana Telsey estimates that the revenue outlook provided by Kohl’s would be in a range of approximately $ 17.14 billion to $ 17.89 billion. That would still be below the $ 18.89 billion in revenue the company posted in 2019.
Gass told analysts the company is more cautious on its outlook as the company could face potential cost issues and supply chain disruptions year round.
Later in the fall, Kohl’s is preparing to bring beauty retailer Sephora to about 200 of its stores and grow to 850 locations by 2023. The company hopes the initiative will help increase traffic and reach a younger customer. At the same time, the company has expanded its list of national brand partners, including Levi’s, Lands’ End and Eddie Bauer.
Following the recent debut of the new active line FLX, the company is preparing to launch another group of private labels. Kohl’s is well on the way to expanding its active business to 30% of total sales in the next few years.
At the close of the market on Thursday, Kohl shares had risen by more than 33% since the beginning of the year. Kohl’s has a market cap of $ 8.5 billion, which is significantly more than Macy’s and Nordstrom’s.
Clarification: An earlier version of this story incorrectly stated that target stocks fell on Wednesday after reporting gains.
You can find the results report from Kohl’s here.