Kohl’s Meets Q4 Estimates, Weak Outlook & Store Closures Weigh On Stock

Kohl’s Corp. may have met analysts’ fourth-quarter forecasts, despite an overwhelming tough holiday for retail at large, but investors were hung up on management’s soft 2016 outlook.

At press time (10:20 a.m. EST), the department store chain’s stock was down 2 percent after the firm said it expects possible sales declines in 2016 and added that it would close 18 underperforming stores as it seeks to “explore ways to enhance shareholder value through the optimization of its existing store portfolio.”

We see exciting growth potential in the new stores and new formats that we are opening this year and are heavily investing in the health of our overall stores portfolio to continue to serve our current and future customers,” Kohl’s Chairman, President and CEO Kevin Mansell said in a release. “A vital component of our omnichannel approach is to clearly understand the evolving retail environment and ensure that we are well-positioned to leverage our resources on productive projects.”

Kohl’s reported Q4 net income of $296 million, or $1.58 per diluted share, a 20 percent decline from the same year-ago quarter’s net income of $369 million, or $1.83 per diluted share.

Total sales advanced a modest 0.8 percent year-over-year, to $6.4 billion, from $6.3 billion in the comparable quarter.

Analysts had predicted Q4 diluted EPS of $1.56 and revenue of $6.4 billion.

We believe that the strategic framework of the Greatness Agenda is working as evidenced by our achievement of five consecutive quarters of positive comparable sales increases. I am particularly encouraged by the 4 percent increase we saw between Thanksgiving and Christmas. At the most competitive time in retail, customers were choosing Kohl’s,” Mansell said. “This strength, however, was substantially offset by softness in early November and in January when demand for cold-weather goods was especially low, resulting in a quarterly comparable sales increase of 0.4 percent, which was below our expectations.”

Kohl’s’ full-year sales totaled $19.2 billion, a 1 percent rise over the previous year while earnings slid 22.4 percent year-over-year, to $673 million, or $3.46 per diluted share.

Looking ahead, the company expects FY16 diluted EPS in the range of $4.05 to $4.25; sales growth (declines) in the range of -0.5 percent to 0.5 percent; and comp growth between 0 percent and 1 percent.

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