Kohl's (KSS) Reports Balanced Earnings and a Cautious Full-Year Outlook
Family-oriented department store chain Kohl's (KSS) reported fairly lackluster earnings last week, raising investor concerns that previous earnings from Wal-Mart (WMT) and Macy's (M) were only precursors to a weakening consumer environment. The company, which operates stores om 49 states across the United States, reported a profit of $231 million, down 3.5% from $240 million in the prior year quarter.
On a per-share basis, earnings rose from $1.00 to $1.04, due to a decline in the number of outstanding shares during the quarter. Revenue increased 2% to $4.29 billion, and same-store sales rose 0.9% Daily Chart
Kohl's earnings were perfectly in line with its previous forecast for earnings between $1.00 to $1.08 per share and a revenue increase between 1% to 3%. Same-store sales, however, came up short of the 2% growth that it had previously expected. Looking forward into the third quarter, Kohl's forecasts earnings between $0.83 to $0.92 per share on a top line increase between 1% to 3%. Analysts polled by Thomson Reuters expect the company to earn $0.94 per share on 1% sales growth. For the full year, Kohl's outlook was similarly cautious -- lowering its per-share earnings forecast for the full year from $4.15-$4.45 to $4.15-$4.35. That uncertain outlook reflected the lowered full-year projections from many of its industry peers. It also reflects grave uncertainty regarding its key back-to-school season -- the retail industry's second most important season after the November to December holiday season. In addition, a cooler, wetter, earlier fall has also been factored in to its outlook. Despite the company's cautious view, many analysts see Kohl's earnings as robust compared to Macy's and Wal-Mart, and an indicator that consumer spending may not be as weak as previously forecast. Kohl's sells apparel, footwear and accessories for women, men and children, home products and housewares. The company has also expanded its e-commerce operations in recent years, adding exclusive online products that weren't available at its brick-and-mortar locations. During the quarter, gross margin edged up from 39.0% to 39.1% although input costs climbed 2%. It increased its store count 1.9% to 1,155 locations. Selling, general and administrative (SG&A) expenses increased 2.6%. Shares of Kohl's have remained flat over the past twelve months. The stock trades at 11 times forward earnings with a 5-year PEG ratio of 1.86, indicating limited downside but throttled growth potential going forward. The company also pays a quarterly dividend of $0.35 per share -- a 2.7% yield at current prices. Other News About KSS Kohl's Unveils New Exclusive Collection of Athletic Apparel to Support Women's Health
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Published on Aug 26, 2013
By Leo Sun