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Kohl’s shares tumble despite the retailer’s strong sales beat and hiked outlook

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Vehicles sit parked in front of a Kohl’s department store in Ashland, Ky.

Luke Sharrett | Bloomberg | Getty Images

Kohl’s shares tumbled Thursday, despite the company reporting fiscal-first quarter profit and sales that exceeded expectations and hiking its full-year forecast.

The stock was down around 7% in premarket trading.

It followed a similar trend with Walmart and Lowe’s, both of which reported strong earnings results earlier in the week and then their stocks lose momentum throughout the day. Some investors are cautious about how long the fervent demand coming out of the pandemic will last, especially as stimulus checks are spent.

Macy’s stock similarly spiked on upbeat results released Tuesday and signs of shoppers returning to stores to splurge on dresses and luggage, but closed the day down.

Kohl’s results are not as strong when compared with those before the pandemic, according to GlobalData Retail Managing Director Neil Saunders, noting that sales are down about 10% from 2019 levels.

“Good growth was always inevitable given the terrible results of last year,” Saunders said about Kohl’s lapping a period when its stores were forced shut during the Covid health crisis. “While the company is on a steep recovery trajectory, it has not fully dug itself out of the hole that the pandemic created.”

Here’s how Kohl’s did for the quarter ended May 1, compared with what analysts were anticipating, based on a Refinitiv survey:

  • Earnings per share: $1.05 adjusted vs. 4 cents expected
  • Revenue: $3.89 billion vs. $3.48 billion expected

Kohl’s net income climbed to $14 million, or 9 cents per share, from a loss of $541 million, or $3.52 per share, a year earlier. Excluding one-time adjustments, the company earned $1.05 per share, outpacing expectations for 4 cents, based on a Refinitiv survey.

Revenue soared nearly 70% to $3.89 billion from $2.43 billion a year earlier. That beat expectations for $3.48 billion.

The company said its store sales more than doubled during the quarter, while digital sales rose 14% year over year. It didn’t break out same-store sales figures.

Kohl’s Chief Executive Michelle Gass said momentum built throughout the quarter, especially in stores, where the retailer has been investing in new private brands and refreshing displays in activewear, women’s apparel and beauty.

Kohl’s expects full-year adjusted earnings per share to be between $3.80 and $4.20, up from a prior range of $2.45 to $2.95.

Net sales are estimated to rise in the mid-to-high teens percentage range, compared with a previous expectation of a mid-teens percentage jump.

Analysts had been looking for adjusted earnings of $3.15 per share, with sales rising 19.3% for the year, according to Refinitiv.

Telsey Advisory Group research analyst Dana Telsey estimates that the sales outlook provided from Kohl’s would equate to a range of about $17.14 billion to $17.89 billion. That would still be below the $18.89 billion in revenue that the company booked in 2019.

Later this fall, Kohl’s is preparing to bring the beauty retailer Sephora into about 200 of its stores, growing to 850 locations by 2023. The company hopes the initiative will help it to drive traffic and reach a younger customer.

It also said it is preparing to launch another group of private-label brands, following the recent debut of its new active line FLX. Kohl’s is on track to grow its active business to represent 30% of total sales in the next few years.

As of market close Wednesday, Kohl’s shares have risen more than 48% year to date. Kohl’s has a market cap of $9.5 billion, which is notably more than Macy’s and Nordstrom.

Find the earnings press release from Kohl’s here.

Kohl’s shares tumble despite the retailer’s strong sales beat and hiked outlook

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