Kohl’s reports a 43.5% decline in net sales as COVID-19 shuts stores in the first quarter

Kohl’s reports a 43.5% decline in net sales as COVID-19 shuts stores in the first quarter
  • Kohl's falls short on analysts' estimates for earnings and revenue in the first quarter.
  • The U.S retailer says it concluded the recent quarter with £1.63 billion in cash.
  • The American department store chain's gross margins decline to 17.3% in Q1.

Kohl’s (NYSE: KSS) released its quarterly financial results on Tuesday that posted a 43.5% decline in net sales in Q1. The company attributed the downbeat performance to the Coronavirus pandemic that forced its stores into temporarily shutting down.

Shares of the company initially responded with a 3% decline in premarket trading on Tuesday followed by a 1% increase later on. Learn more about how to buy shares online in 2020.

Kohl’s Q1 financial results versus analysts’ estimates

According to Refinitiv, experts had forecast the company to print £1.78 billion in revenue in the first quarter. In terms of loss per share, their estimate was capped at £1.47. In its report on Tuesday, Kohl’s fell short of both estimates posting a marginally lower £1.77 billion in revenue while its loss expanded significantly to £2.62 per share in Q1.

In the same quarter last year, Kohl’s revenue came in at £3.12 billion.

At £442 million, the retailer’s net loss in Q1 came in significantly lower than £51 million profit that it recorded in the comparable quarter of last year. The company refrained from reporting results for same-store sales in the recent quarter as COVID-19 shut the majority of its countrywide stores. As per FactSet, however, analysts had anticipated a 31% decline in Kohl’s same-store sales in the first quarter.

Kohl’s had also withdrawn its financial guidance in March due to the rising Coronavirus uncertainty. As of Tuesday, the retailer announced, roughly 50% of its 1,160 U.S stores have resumed operations.

Kohl’s said that it concluded the recent quarter with £1.63 billion in cash. The company boasted access to an additional £409 million via its revolving credit line.

Kohl’s gross margins decline to 17.3% in the first quarter

In its report on Tuesday, the American department store retail chain also announced a decline in its gross margins from 36.8% in Q1 last year to 17.3% in the recent quarter. According to CEO Michelle Gass of Kohl’s:

“We entered the year in a strong financial position and our business was tracking to our expectations prior to the onset of the crisis. We know this experience will have a lasting impact to customer behaviour and the retail landscape.”

At £15.50 per share, Kohl’s is currently about 60% down year to date in the stock market after recovering from a low of £9.41 per share in early April. Its performance in 2019 also remained downbeat with an annual loss of roughly 20%.

At the time of writing, Kohl’s is valued at £2.39 billion and has a price to earnings ratio of 4.30.

By Wajeeh Khan
Mr. Khan specialises in Public Health by academia but is a trader by passion. Taking up two new hobbies of writing and trading in his teen years, he is now a professional trader and news writer with over 5 years of experience in various financial markets. Khan is passionate about bringing insightful articles to his readers and hopes to add value to their portfolios.
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