Kohl’s Tops Q4 Earnings Estimates, Predicts Sales Growth in the Year Ahead

Kohl’s Corp. delivered a solid end to the fiscal year with better-than-expected fourth-quarter earnings and sales.

For the three months ended Jan. 30, the Menomonee Falls, Wis.-based company posted adjusted earnings of $2.22 per share, versus the prior year period’s earnings of $1.99 per share. Wall Street had predicted earnings of $1.01 per share. Revenues declined 10.1% to $6.14 billion but still beat consensus bets of $5.86 billion.

Digital was a strong point for the department store, which saw online revenues jump 22% from the previous year. (E-commerce accounted for 42% of its total sales.) Kohl’s also shared that its home business notched positive sales growth, while it “outperformed ” in the active and beauty categories, as well as recorded “continued improvement” in its women’s business.

“After an extraordinary year managing through the pandemic, we ended the year in a very solid financial position, and we enter 2021 with strong momentum,” CEO Michelle Gass said in a statement. “We are pleased with the progress we are making against our strategic initiatives, and we are set up to deliver a multiyear improvement in sales and operating margin.”

For the 2021 fiscal year, Kohl’s forecasted that net sales would increase in the mid-teens percentage range, while operating margin is expected to be in the range of 4.5% to 5% and earnings per share in the range of $2.45 to $2.95, excluding any nonrecurring charges.

What’s more, as it faces pressure from an activist investor group that attempted to take control of its board, the retailer announced that it will resume its capital allocation strategy — including increasing capital expenditures, reinstating its dividend and buying back shares.

Last week, Kohl’s rejected the group’s attempt to take control of its board, arguing that the move would “disrupt our momentum” in overhauling its business. Today, it said that it would spend between $200 million and $300 million on its share repurchase program this year.

In addition, the chain plans to invest $550 million to $600 million in capital expenditures, with some of those funds going toward the launch of beauty giant Sephora’s shop-in-shops at 850 Kohl’s stores and the opening of its sixth e-commerce fulfillment center in the United States. It also previously declared a dividend payment of 25 cents per share, payable at the end of the month.

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