Kohl’s (ticker: KSS) stock experienced a decline on Tuesday, despite surpassing quarterly earnings expectations. The retailer reported third-quarter earnings of 53 cents per share, beating Wall Street’s estimate of 35 cents per share, as reported by FactSet. However, this marks a decrease from the year-ago quarter when earnings were at 82 cents per share.
Unfortunately, Kohl’s fell short in terms of net sales, which amounted to $3.84 billion instead of the estimated $3.99 billion. Additionally, same-store sales saw a decline of 5.5% compared to last year, worse than the expected decrease of 3.8%.
CEO Tom Kingsbury acknowledged this setback in the earnings release, stating that the strategies implemented to improve sales and earnings performance are still in the early stages. Despite this, Kohl’s adjusted its full-year 2023 earnings guidance from a range of $2.10 to $2.70 per share to a new range of $2.30 to $2.70 per share. The company also adjusted its net sales forecast, expecting a decline of 2.8% to 4% instead of the previously predicted 2% to 4% drop.
Analyst Zachary Warring from CFRA Research expressed some cautious optimism following the earnings report. He highlighted Kohl’s positive aspects such as its partnership with Sephora, its strength in home, athleisure wear, and gifting, as well as its smaller store size compared to competitors. Warring believes that the worst is behind Kohl’s and sees limited downside risk for the company’s shares.
However, he did note that improvements to the balance sheet are necessary to generate further excitement about the stock. As a result, Warring has assigned a “Hold” rating to Kohl’s shares with a $28 price target.
In premarket trading, Kohl’s stock was down 5.5% to $23.50.
