HomeEarningsKohl's (KSS) Q3 2021 earnings

Kohl’s (KSS) Q3 2021 earnings

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

Justin Sullivan | Getty Photographs Information | Getty Photographs

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 rose greater than 6% early Thursday.

Kohl’s is without doubt one of the retailers that was hit exhausting by the pandemic, as People hung out at residence and had few causes to refresh their wardrobe or purchase new sneakers. As customers get out and about once more, it’s attempting 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 outlets 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, web revenue rose to $243 million, or $1.65 per share, from a web 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% acquire that analysts anticipated, in response to 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 energetic attire was a vivid spot as buyers purchased athleisure and exercise garments from Nike, Beneath Armour, Adidas and Champion and responded to the retailer’s inclusive sizing.

Sephora outlets draw new clients

The addition of Sephora outlets is attracting youthful and extra various clients and resulting in greater gross sales, she mentioned. On the Kohl’s shops the place Sephora outlets have opened thus far, it’s seeing a mid single-digit carry 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, for the reason that outlets are simply in a fraction of Kohl’s shops.

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

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

Low stock

Nonetheless, Gass mentioned Kohl’s remains 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 cellphone interview that the corporate has invested in know-how on its web site to supply buyers different decisions in the event that they discover objects out of inventory, or not within the dimension that they are in search of.

Some customers have kicked off their vacation procuring early this yr, partially 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 assume there’s most likely some early shopping for, however I feel it is human nature, clients 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 fees. Beforehand, Kohl’s predicted earnings of $5.80 to $6.10 per share.

Together with pandemic-related challenges, Kohl’s had a current conflict with activist traders who raised doubts in regards to the firm’s path and tried to take management of its board. The group of traders —Macellum Advisors, Ancora Holdings, Legion Companions Asset Administration and 4010 Capital — got here to an settlement with the retailer in April and added a number of investor-backed impartial administrators to its board.

Kohl’s mentioned it purchased again $506 million of shares within the third quarter and now plans to repurchase a complete of $1.3 billion of shares in 2021.

As of Wednesday’s shut, Kohl’s shares are up about 39% this yr. Shares closed down about 3% to $56.48 on Wednesday, bringing the corporate’s market share to $8.50 billion.

—CNBC’s Lauren Thomas contributed to this report.

Learn the corporate’s press launch right here.

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