Kohl’s (NYSE: KSS) Q4 earnings decline 3% but beat estimates

Kohl’s Corporation (NYSE: KSS) reported a 3% decline in earnings for the fourth quarter of 2019 due to higher costs and expenses. The results exceeded analysts’ expectations. Further, the company issued earnings guidance for the full year 2020 that is in-line with the consensus view.

Net income declined by 3% to $265 million while earnings rose by 3% to $1.72 per share on the lower average number of shares outstanding. Adjusted earnings decreased by 11% to $1.99 per share. Revenue rose by 0.1% to $6.83 billion despite flat comparable sales. Analysts had expected EPS of $1.88 on revenue of $6.52 billion.

Looking ahead into the full year 2020, the company expects earnings in the range of $4.20-4.60 per share. This is within the consensus view of $4.59 per share. Comparable sales are expected to be between negative 1% and positive 1%. Gross margin is predicted to decline by 10-20 basis points compared to last year.

For the full-year 2020, the company predicts SG&A dollars to increase by 1-2% over last year and depreciation expense of $940 million. Interest expense is projected to be $210 million and the effective tax rate is expected to be in the range of 24-25%.

For 2019, the company has been further strengthening its differentiation in the market with a year of innovation and investment despite its results not meeting its expectations. During the year, the company was benefited by the acceleration of traffic and new customer acquisition in its stores and online driven by the unprecedented level of new brands and partnerships.

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On February 26, the company’s board declared a quarterly cash dividend on its common stock of $0.704 per share, a 5% increase over its prior dividend. The dividend is payable on April 1, 2020, to shareholders of record at the close of business on March 18, 2020.

As of February 1, 2020, Kohl’s has a long-term debt of $1.86 billion while it had only $723 million of cash and cash equivalents. The total current assets decreased by 4% to $4.65 billion while total current liabilities rose by 1% to $2.77 billion. The total debt-to-equity ratio is at 1.14 and this means the company continues to be aggressive in financing its growth with debt.

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