Kohl’s (KSS) Q3 2021 earnings

Kohl's (KSS) Q3 2021 earnings

Prospects go away a Kohl’s retailer on November 12, 2015 in San Rafael, California.

Justin Sullivan | Getty Pictures Information | Getty Pictures

Kohl’s on Thursday mentioned gross sales rose 16% within the fiscal third quarter, as buyers turned to its shops and web site for garments and make-up.

The division retailer raised its forecast for the yr, following its better-than-expected efficiency.

Shares closed Thursday at $62.48, up 10.6%. With the day’s positive aspects, Kohl’s inventory is up 53% this yr, bringing its market worth to $9.4 billion.

Kohl’s is among the retailers that was hit laborious by the pandemic, as Individuals hung out at house and had few causes to refresh their wardrobe or purchase new footwear. As customers get out and about once more, it’s making an attempt to attract them in with a wider assortment of clothes, together with activewear, and a brand new partnership with Sephora. It has opened about 200 Sephora retailers within Kohl’s shops and plans so as to add extra.

CEO Michelle Gass mentioned the strikes the retailer is making are paying off.

“All the items of our technique are coming collectively and we stay extremely assured in the way forward for our enterprise,” she mentioned in a information launch.

This is what the corporate reported in contrast with Refinitiv consensus estimates:

  • Earnings per share: $1.65 vs. 64 cents anticipated
  • Income: $4.6 billion vs. $4.27 billion anticipated

Within the third quarter ended Oct. 30, internet revenue rose to $243 million, or $1.65 per share, from a internet lack of $12 million, or 8 cents per share, a yr earlier. The outcomes topped the 64 cents per share anticipated by analysts surveyed by Refinitiv.

Income climbed to $4.6 billion from $3.98 billion a yr in the past, outpacing estimates of $4.27 billion.

Similar-store gross sales, which monitor gross sales on-line and at Kohl’s shops open for at the very least 12 months, grew 14.7% within the third quarter, topping the 12.5% achieve that analysts anticipated, in line with StreetAccount.

Digital gross sales grew 6% within the third quarter and 33% on two-year foundation, Gass mentioned on an earnings name. E-commerce drove 29% of whole gross sales within the quarter.

Gass mentioned the corporate noticed sturdy gross sales in males’s, girls’s and youngsters’s attire and footwear throughout the three-month interval. She mentioned lively attire was a vivid spot as buyers purchased athleisure and exercise garments from Nike, Underneath Armour, Adidas and Champion and responded to the retailer’s inclusive sizing.

Sephora retailers draw new prospects

The addition of Sephora retailers is attracting youthful and extra various prospects and resulting in larger gross sales, she mentioned. On the Kohl’s shops the place Sephora retailers have opened up to now, it’s seeing a mid single-digit elevate to same-store gross sales in contrast with ones that don’t but have it, she mentioned.

Greater than 25% of Sephora buyers are new to Kohl’s, she mentioned. It’s nonetheless early days for the partnership, because the retailers are simply in a fraction of Kohl’s shops.

“Once we’re up over 600 [Sephora shops] subsequent yr, you may solely think about the hundreds of thousands and hundreds of thousands of consumers that we’ll be introducing, so it is already significant and that can solely develop,” she mentioned.

As the corporate renovates so as to add these retailers, it’s refreshing the feel and appear of its shops. She mentioned it’s teaming up with different standard manufacturers, too, and can launch a unique assortment with Draper James, the style firm based by actress Reese Witherspoon.

Low stock

Nevertheless, Gass mentioned Kohl’s continues to be weighed down by provide chain challenges and better prices — a dynamic that she expects to proceed. She mentioned ranges of stock stay decrease than deliberate as the corporate copes with manufacturing and transit delays.

She mentioned the retailer’s stock was down 25% on a two-year foundation on the finish of the third quarter. That has benefited the corporate’s margins and pushed turnover of merchandise, as much less winds up on the clearance rack.

Gass mentioned in a separate telephone interview that the corporate has invested in know-how on its web site to supply buyers different decisions in the event that they discover gadgets out of inventory, or not within the measurement that they are in search of.

Some customers have kicked off their vacation procuring early this yr, partly to keep away from operating into empty cabinets. However Gass mentioned the pre-Black Friday rush hasn’t resulted in a dramatic pull-forward of fourth-quarter gross sales.

“I do suppose there’s in all probability some early shopping for, however I believe it is human nature, prospects will purchase all through the season,” she mentioned.

The retailer mentioned it now expects to earn between $7.10 and $7.30 per share for the yr, excluding expenses. Beforehand, Kohl’s predicted earnings of $5.80 to $6.10 per share.

Together with pandemic-related challenges, Kohl’s had a recent clash with activist investors who raised doubts about the company’s direction and tried to take control of its board. The group of investors —Macellum Advisors, Ancora Holdings, Legion Partners Asset Management and 4010 Capital — came to an agreement with the retailer in April and added a few investor-backed independent directors to its board.

Kohl’s said it bought back $506 million of shares in the third quarter and now plans to repurchase a total of $1.3 billion of shares in 2021.

—CNBC’s Lauren Thomas contributed to this report.

Read the company’s press release here.

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