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Kohl's Tops Q4 Earnings Forecast, Sees Weakening 2020 Margins

Kohl's beat forecast for sales and earnings over the holiday period under the ongoing turnaround strategy of CEO Michelle Gass.

Kohl's Corp.  (KSS) - Get Report posted stronger-than-expected fourth quarter earnings Tuesday but noted that same store sales and profit margins could fall in the coming financial year even as it boosted its dividend by 5%.

Kohl's said earnings for the three months ending on February 1 were pegged at $1.99 per share, down 11.2% from the same period last year but 11 cents ahead of the Street consensus forecast. Group net revenues, Kohl's said, rose 4.5% to $6.832 billion, again topping analysts' estimates of a $6.523 billion tally.

Looking into the 2021 fiscal year, Kohl's said it sees comparable sales in the range of a 1% increase to a 1% decrease, with gross profit margins falling between 10 basis points and 20 basis points when compared to the previous year. Earnings, Kohl's said, will likely come in between $4.20 and $4.60 per share against a Refinitv forecast of $4.59.

"While 2019 was a year in which our financial results did not meet our expectations, it was also a year of innovation and investment that further strengthened Kohl’s differentiation in the market," said CEO Michelle Gass. "We are encouraged by the acceleration of traffic and new customer acquisition in our stores and online driven by the unprecedented level of new brands and partnerships we launched during the year." 

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"I want to thank all of our associates for their ongoing commitment to Kohl’s and I am confident that we will build on our strengths in 2020 to stabilize and position the business for future growth,” she added.  

Kohl's shares were marked 1.25% lower in early Tuesday trading following the earnings release to change hands at $37.85 each, a move that would extend the stock's six-month decline to around 18%.

Kohl's said it would pay a quarterly dividend of 0.704 cents per share, a 5% increase from the previous level, that will be payable on April 1.