Kohl’s (KSS) Shares Surge on Earnings Beat

Shares of Kohl’s Corporation (KSS) were trading up +4.21 or +9.75 percent to $47.37 in Thursday’s premarket after the company announced better than expected results for its fiscal third quarter early this morning. Kohl’s stock closed at $43.16, down -2.44 or -5.35 percent in Wednesday’s regular trading session.

Menomonee Falls, Wisconsin based Kohl’s Corporation was originally founded as a supermarket in 1946, opening its first department store in 1962.
The company is the largest department store chain by number of stores in the United States and the second largest store by retail sales after Macy’s. Kohl’s operates 1,166 stores in 49 states and sells national and exclusive brands of clothing, jewelry, houswares, electronics, beauty products and furniture. Kohl’s stock is a component of the S&P 500 index and is also listed on the Fortune 500.

For the company’s fiscal third quarter ended on October 31st, 2015, Kohl’s reported net income of $120 million or $0.63 per share compared to $142 million or $0.70 per share in the same period one year ago. After the exclusion of a loss and the extinguishment of debt, adjusted earnings per share came to $0.75.

Revenue increased to $4.427 billion versus $4.374 billion in 2014’s third quarter. The analyst consensus was for the company to report earnings of $0.69 per share on sales of $4.406 billion. Same store sales for the quarter increased +1 percent compared to a decline of -1.8 percent in last year’s third quarter, while gross margins declined a notch to 37.1 percent from 37.2 percent one year ago.

Kohl's President, Chief Executive Officer and Chairman Kevin Mansell, said in the company’s press release that, “Our 1% increase in sales was driven by strong back-to-school and late October selling periods offset by a weak September. Most of our key initiatives enjoyed strong success while weakness was concentrated in seasonal businesses.”

Kohl’s announced in May of 2014 a plan outlining a path to resume growth after the company reported weaker than expected first quarter results. The multi year plan announced by Kevin Mansell included stocking better products, offering better savings deals, improving promotions and catering to local tastes in merchandise at their stores. The plan may have begun taking hold in the current quarter with the positive same store sales results.

Kohl’s results follow yesterday’s dismal report from Macy’s (M) showing a sharp drop in quarterly sales. The company also lowered its guidance for the rest of the year. The decrease in sales was in large part due to the unseasonably warm temperatures in September and October and the impact on winter clothing sales.

In addition to the earnings report, Kohl’s declared a quarterly dividend of $0.45 per share on the company’s common stock, to shareholders of record at the close of business on December 9th, 2015 and payable on December 23rd, 2015.

Kohl’s stock has declined significantly since trading as high as $79 per share on April 2nd of 2015. The decline in the entire retail segment has taken its toll on the stock, but could be in the process of reversing in the near term.

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Published on Nov 12, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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