Kohl's Beats Expectations, Helps Lift Retail Stocks
DOW JONES & COMPANY, INC. 8:15 AM ET 8/11/2016
Symbol Last Price Change
KSS 43.49down +5.45 (+14.33%)
M 38.925up +4.925 (+14.49%)
QUOTES AS OF 09:55:20 AM ET 08/11/2016
Kohl's Corp. (KSS), which gave investors an early glimpse at retail earnings, posted a surprise increase in profit as gross margin expanded in the latest quarter, as the retailer made progress on its plan to clear out excess inventory.
Shares rose 10% to $41.85 in premarket trading. The performance from Kohl's(KSS) and Macy's Inc.(M), which also reported results that easily topped Wall Street views, gave retail stocks a boost and were poised to lead gains in the broader market Thursday.
Nevertheless, Kohl's(KSS) cut its earnings forecast for the year as it reported same-store sales fell slightly more than expected in the latest period. Kohl's(KSS) now expects earnings of $3.80 to $4 a share on an adjusted basis, compared with its prior range of 4.05 to $4.25 a share.
Kohl's (KSS) said sales growth at established stores fell 1.8% in the latest period compared with a 0.1% increase a year before. Analysts polled by Consensus Metrix had expected a decline of 1.7%.
Chairman and Chief Executive Kevin Mansell said the company is pleased with the performance in juniors and young men's amid back-to-school shopping.
Kohl's (KSS), like other retailers, has been struggling with muted sales, hurt by dwindling store traffic, competition from discount retailers and cautious consumer spending. Last fall, it unveiled a multiyear plan to return to growth that included stocking more national brands, offering more compelling savings, tailoring merchandise to local tastes and better targeting promotions. The plan came as the retailer has been considering going private or breaking up, The Wall Street Journal reported in January.
The company plans to test a smaller-format Kohl's(KSS) store, something other retailers have tried.
Over all for the quarter ended in July, Kohl's(KSS) reported a profit of $140 million, or 77 cents a share, compared with $ 130 million, or 66 cents a share, a year earlier. Excluding certain items, earnings rose to $1.22 a share from $1.07 a year ago. Analysts polled by Thomson Reuters had forecast per-share earnings of $1.03.
Revenue fell 2% to $4.18 billion, above analysts' expectations of $4.17 billion.
The company ended the second quarter with 1,150 stores compared with 1,164 stores at the same time a year ago. Gross margin expanded to 39.5% from 38.9% a year before. Mr. Mansell said ending inventory per store was down significantly from last year.
Stocks of other retailers moving Thursday included Macy's(M), which said it would close 100 stores, up 14.4% to $38.90. Fellow department store Nordstrom, slated to report after the closing bell, gained 6.5% to $47.11, and J.C. Penney Co. increased 5.1% to $9.62. Meanwhile, Wal-Mart Stores Inc. rose 1.1% and Target Corp. climbed 2.7%.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
08-11-160815ET
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