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Kohl’s Q3 results beat estimates; stock falls on weak guidance

Shares of Kohl’s Corp. (KSS) fell sharply early Tuesday after the department store chain released disappointing guidance for the holiday season, despite an upward revision. For the third quarter, the company reported stronger than expected earnings and revenues.

The Wisconsin-based retailer reported total revenues of $4.63 billion for the October quarter, representing a 1.3% increase from last year. Comparable sales rose 2.5%, exceeding expectations and marking the fifth consecutive growth.

During the third quarter, adjusted and reported profit climbed 40% to $161 million or $0.98 per share from $117 million or $0.70 per share in the year-ago quarter. Both earnings and revenues beat estimates. Operating expenses increased 2.6% to $1.38 billion during the three-month period, while gross margin improved to 37%.

“We experienced strength across our entire apparel business, and our focus on speed to market and inventory management are driving relevancy with our customers, resulting in sales growth, margin expansion, and clean inventory levels,” said CEO Michelle Gass.

The management narrowed its full-year adjusted earnings outlook to the range of $5.35 per share to $5.55 per share from the previous guidance of $5.15-5.55 per share. The forecast for unadjusted earnings per share was narrowed to the $5.16-$5.36 range from the earlier outlook of $4.96 to $5.36. However, Wall Street had predicted better earnings numbers for the year.

Comparable sales rose 2.5% during the third quarter, exceeding expectations and marking the fifth consecutive growth

Earlier this month, the company declared a quarterly cash dividend of $0.61 per share, to be paid on December 26, 2018, to shareholders of record on 12, 2018.

Kohl’s has introduced an array of promotional offers to lure customers to its stores during the holiday season. The deals, combined with upbeat consumer sentiment and the company’s ongoing efforts to ramp up its online platform, are expected to add to sales in the upcoming quarter.

Kohl’s Corp lifts outlook as it posts Q2 earnings growth

Of late, the management has been exploring alternative avenues to boost revenue, such as a recent partnership with Amazon to facilitate the latter’s returns and renting out store space to other business.

Kohl’s shares dropped about 10% in pre-market trading Tuesday following the earnings report, after closing the previous session down 2%. The stock gained about 30% since the beginning of the year.

Listen to publicly listed companies’ earnings conference calls along with the edited closed caption text

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