Kohl’s (KSS) Q2 Earnings & Sales Beat Estimates, Guides Up
Kohl’s Corporation KSS delivered second-quarter fiscal 2018 results, wherein both the top and bottom lines grew year over year and surpassed the Zacks Consensus Estimate. While this marked the fifth straight quarter of revenue beat, earnings came ahead of the consensus mark for the third time in row. The better-than-expected results prompted management to lift fiscal 2018 earnings view.
Certainly, the positive surprise streak have led the shares of this Zacks Rank #2 (Buy) company to more than double in a year compared with the industry’s growth of roughly 77%.
Coming back to results we note that the quarterly earnings of $1.76 per share beat the Zacks Consensus Estimate of $1.65 and soared 42% on a year-over-year basis. The uptick came on the back of higher sales, enhanced gross margin and lower interest expense.
Management highlighted that both store and digital channels showcased strength, while proprietary and national brands also portrayed sturdy performance. The company’s Men’s and Women’s apparel businesses along with Footwear witnessed strength.
Sales and Margins
Total revenue came in at $4,570 million, up 4% from the prior-year period and also came ahead of the Zacks Consensus Estimate of $4,446 million. Net sales jumped 3.9% to $4,310 million, while other revenue increased to $260 million from $248 million in the year-ago quarter.
Further, comparable store sales (comps) rose 3.1% against a 0.4% dip recorded in the year-ago quarter. Well, comps have been positive since the past four quarters.
Moving on, gross margin expanded 42 basis points (bps) to 39.5% in the reported quarter. Gross margin improved on account of sustained inventory management. Further operating income came in at $452 million, up 11.1% from the prior-year quarter’s level.
Other Financial Details
Kohl’s ended the quarter with cash and cash equivalents of $1,066 million, long-term debt of $2,273 million and shareholders’ equity of $5,487 million. The company generated net cash flow of $1,047 million from operating activities during the first six months of fiscal 2018.
Well, such upbeat results boosted the company’s bottom-line expectations for fiscal 2018. Management now expects adjusted earnings in the band of $5.15-$5.55 per share up from the prior guidance of $5.05-$5.50. Including loss on extinguishment of debt, earnings are envisioned in the range of $4.96-$5.36 per share. The Zacks Consensus Estimate for fiscal 2018 is pegged at $5.40.
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