Kohl’s roars in Q1, but 2021 outlook scares Wall Street

NEW YORK (AP) – Kohl’s on Thursday raised its financial outlook for the year, following a strong rebound in the first quarter following the devastating effects of the pandemic.

But those high expectations fell short of what many industry analysts had expected, and stocks plunged nearly 11% on Thursday. During a conference call, Kohl’s explained that it had taken into account congestion in ports and inflationary pressures on wages which could increase costs in the second half of the year.

Kohl’s is trying to manage supply chain issues by adding more drivers and increasing the frequency of store deliveries.

More shoppers returned to shop in stores as COVID-19 vaccinations became more common and Kohl’s rebounded to a profit after the Menomonee Fall, Wis.-Based chain lost money. money last year when it was forced to close its doors along with thousands of other retailers.

Quarterly sales and profits exceeded almost all expectations, but Kohl’s said he expects net sales to increase only in the percentage range of middle to high teens. It scared off investors.

“Kohl’s is either conservative and cautious with its forecasts – which is understandable given that everything remains uncertain – or lacks confidence that its various initiatives and a strong consumer economy will pay off as quickly as investors do.” would like, ”writes Neil Saunders, Managing Director of GlobalData. “Either way, the suggestion is that Kohl’s will lose market share overall during 2021.”

Like Kohl’s, a number of major retailers have released banner numbers for the first quarter of this week as newly vaccinated shoppers come out of hibernation.

“The American consumer is in a stronger position,” CEO Michelle Gass said on a call with analysts Thursday. “Spending has increased on the back of the stimulus, easing restrictions on COVID and people returning to more normal lives in their daily lives.”

The company had pushed to reinvigorate stores before the pandemic hit. Late last year, he announced that Sephora would replace all of Kohl’s cosmetic areas with 2,500 square foot stores. It is building on the move and said on Thursday it would create high-end areas dedicated to brands like Calvin Klein near those cosmetics stores to capture some of the expected traffic.

Last month, it added three independent members to its board of directors as part of a deal with an investor group that believes Kohl’s has not kept up with the rapidly changing retail landscape. These investors say Kohl’s needs to reduce inventory, fix its assortment of store labels, cut expenses, and improve its app and website, among other things.

Kohl’s Corp. reported quarterly net income of $ 14 million, or 9 cents a share, after reporting a loss in the same period a year earlier. Profit, adjusted to extinguish debt, was $ 1.05 per share. Wall Street expected the chain to break even, according to a survey by Zacks Investment Research.

Its revenue of $ 3.89 billion, a 60% increase from the previous year, also exceeded expectations.

Gass told the AP in a telephone interview Thursday that Kohl’s was in the process of determining what pandemic habits would persist. Even as Americans return to clothing more typical of the pre-pandemic era, she said they are looking for more comfort.

In March, Kohl’s launched FLX, a new athleisure shopping brand for exactly that reason.

Like other retailers, Kohl’s faces labor shortages. Gass said the chain was offering temporary financial benefits to workers at some of its distribution centers, but did not see a labor shortage in its stores.

Kohl’s raised its net sales expectations to an increase in the middle to high teenage percentage range, compared to previous prospects in mid-teens. The operating margin is now expected to be between 5.7% and 6.1% compared to the previous expectation of 4.5% to 5.0%

Adjusted earnings per share should now be between $ 3.80 and $ 4.20, excluding one-time charges, compared to the previous expectation of $ 2.45 to $ 2.95.

Shares fell nearly 11%, or $ 6.59 per share to $ 53.66. late morning, Thursday.


Part of this story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks inventory report on KSS at https://www.zacks.com/ap/KSS


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