Kohl's Says Q4 Earnings Will 'Exceed Expectations' As Sales, Margins Improve

Kohl's CEO Michelle Gass said the retailer's holiday quarter "exceeded our expectations across all key metrics with sales strengthening as we moved through the period."
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Kohl's Corp.  (KSS) - Get Report shares slipped lower Thursday after the retailer said stronger-than-expected holiday sales would likely boost its fourth quarter earnings.

Kohl's said same-store sales for the three months ending in January fell 11% from last year, but marked the third consecutive quarter of improvement. Online sales are up 20%, however, while gross margins "continued to benefit from disciplined inventory management and further optimization in promotional strategies".

Kohl's said it sees diluted earnings in the region of $1 to $1.05 per share when it reports on March 2, a tally that compares to the 1 penny per share profit reported for the three months ending in October.

 "We are very pleased with the continued progress we are making against the strategic framework we outlined in October 2020. Our fourth quarter performance exceeded our expectations across all key metrics with sales strengthening as we moved through the period," said CEO Michelle Gass. 

"Digital sales growth remained strong, up more than 20%, and accounted for more than 40% of net sales, with our stores playing a critical role in supporting the heightened demand. Our focus on gross margin showed further traction and we managed expenses tightly, which together strengthened our financial position." 

“As we carry this momentum into 2021, we are confident that our key strategic initiatives will accelerate our top line growth and expand our operating margin," Gass added. "We look forward to sharing more on this and our other initiatives, as well as providing more detail on our path to 7% to 8% operating margin, on our upcoming earnings call in March.”  

Kohl's shares were marked 7.2% higher in early trading Thursday to change hands at $50 each, extending its six-month gain to around 155%.

U.S. retail sales weakened for a second consecutive month in December, the Commerce Department said last month, as consumers pulled back on holiday spending amid expanded pandemic job losses.

December retail sales fell 0.7% from the same period last year to $540.9 billion, the Commerce Department report noted, missing the Street consensus forecast of a flat reading. Stripping out auto and gasoline sales, retail sales fell 2.1%, while the same reading for November was downwardly revised to -1.3%.