Kohl’s beats profit expectations, but misses on sales…

Kohl's

Kohl’s released its second-quarter earnings report early on Tuesday. The results caused the stock to spike early before falling into the red shortly after.

Kohl’s reported adjusted earnings per share of $1.55 against an estimated $1.53. However, the company failed to meet sales expectations, reporting $4.17 billion in net sales versus an expected $4.2 billion.

CEO Michelle Gass stated in the press release, “We are pleased to report that our business strengthened as we progressed through the second quarter. Comparable sales were better than the first quarter and improved during the period, turning positive during the last six weeks of the second quarter with 1% growth.”

Gass credited a new partnership with Amazon and a strong start to the back-to-school season for the company’s earnings beat.

Kohl’s Q2 Earnings Highlights

Here are the key numbers from Kohl’s Q2 earnings release:

  • Adjusted EPS: $1.55
  • Net Sales: $4.17 billion
  • Total Revenue: $4.43 billion
  • Gross Margin: 38.8%

The company’s earnings per share are down 11.93% while total revenue is down 3.06% from the same period last year. Kohl’s also reported its net income as $241 million, down 17% from last year.

Though Kohl’s managed to beat Wall Street’s profit expectations, the company’s misses in other areas, like sales, have left many investors feeling down on the stock.

Quarterly Dividend

The company’s board of directors also declared a quarterly cash dividend on its common stock of $0.67 per share on August 13. This dividend is payable on September 25 to shareholders of record at close on September 11.

Guidance

Kohl’s also affirmed its guidance for the full fiscal year. The company is calling for earnings per share of between $5.15 and $5.45. Meanwhile, analysts expect Kohl’s earnings per share to be $5.23 and revenue to be $19.05 billion for the full fiscal year.

New Business Partnerships

One of Kohl’s most successful recent initiatives is its partnership with Amazon. Earlier this year, it was reported that Kohl’s would start accepting Amazon returns in all of its stores starting in July 2019.

With this new service, Kohl’s now accepts “eligible” Amazon items, which customers can return through Kohl’s at no additional cost. The items are then sent to an Amazon return center.

This program is an extension of a partnership that already existed between Amazon and Kohl’s. Kohl’s began selling Amazon products at its stores in 2017. The department store now sells Amazon items, like the Fire TV and Echo Dot, in more than 200 of its locations.

The company also recently announced a deal with sports retailer Fanatics. This partnership will allow Kohl’s to sell licensed NFL and NBA apparel online. This deal also makes Fanatics the sole distributor of licensed sports apparel at Kohl’s.

Partnerships like these are part of Kohl’s initiative to increase traffic and revenue while competing with the likes of Macy’s and J.C. Penney.

Regarding partnerships like these, Gass stated in the earnings report, “We are confident that our upcoming brand launches, program expansions, and increased traffic from the Amazon returns program will incrementally contribute to our performance during the balance of the year and beyond.”

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