Kohl’s stock drops after announcing second-quarter financials

By:
on Aug 20, 2022
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  • Reported a $1.11 EPS in the second quarter, which was $0.01 less than analyst estimates.
  • Kohl expects net sales to decrease in the range of between 5-6%.
  • Kohl's inventory level rose by 48% from the same quarter of the previous fiscal year.

Kohl’s (NYSE: KSSreported a $1.11 EPS in the second quarter of the 2022 financial year, which was $0.01 less than the $1.12 analyst estimate. In the same quarter, the company recorded total revenue of about $4.09 billion, which was also less than the $3.96 billion consensus estimate.

Kohl misses consensus estimates 

Kohl misses EPS analyst estimate by 1c in the second quarter of the 2022 financial year. The company recorded a full-year EPS of $2.80-3.20 in the same quarter, which is also below the $4.06 consensus estimate.

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The company also expects net sales to decrease in the range of between 5-6% as compared to what they reported in the same quarter of the previous fiscal year. Kohl also forecasts an operating margin between 4.2-4.5%.

Michelle Gaas, the company’s Chief Executive Officer, said that they were adjusting their business plans and trying to find ways to cut expenses and decrease inventory. The company has cited hard retail and financing environments as obstacles for it to reaching an “acceptable and fully enforceable agreement.”

The company’s business news also comes at the same time as Target and Walmart both reiterated their FY outlook even as their earnings are currently dealing with a lot of pressure. Michelle Gaas said:

While 2022 has proven more challenging than initially anticipated, Kohl’s remains a financially strong business.

Walmart claimed it witnessed more middle and upper income customers visiting its retail stores looking for discounted products, which contributes to the retailer’s overall performance. However, Target’s profits were hit hard by the company’s efforts to get rid of excess products at discounted prices before the holidays.

Business highlights 

The inventory levels at Kohl’s in the first quarter rose by around 48% from the same quarter of the previous fiscal year because of lower sales. Kohl also said the rise was mainly driven by the Sephora partnership investment and the strategies it has in place to both pack and hold more products.

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