(KSS) is trading nicely higher today after reporting impressive Q1 (Apr)
earnings results this morning. This comes on the heels of Macy's (M) reporting
strong results last week. Perhaps big box retailers are seeing an improving
consumer spending environment.
Kohls operates 1,100+ department stores, a website (www.Kohls.com), 12 FILA outlets, and four Off-Aisle clearance centers. Its Kohl's stores and website sell moderately-priced proprietary and national brand apparel, footwear, accessories, beauty, and home products. Its stores generally carry a consistent merchandise assortment with some differences attributable to local preferences.
Its proprietary well-known brands include Apt. 9, Croft & Barrow, Jumping Beans, SO and Sonoma Goods for Life, and exclusive brands that are marketed through agreements with nationally-recognized brands such as Food Network, Jennifer Lopez, Marc Anthony, Rock & Republic, and Simply Vera Vera Wang. National brands generally have higher selling prices, but lower gross margins, than proprietary brands.
Turning to the AprQ results, non-GAAP EPS rose 65% year/year to $0.64, which was much better than market expectations. This excludes a loss on the extinguishment of debt. Revenue rose 3.6% year/year to $3.95 bln, which was in-line with expectations. KSS also raised EPS guidance for the full year. It now expects non-GAAP EPS of $5.05-5.50, up from prior guidance of $4.95-5.45.
Same store comps are always an important metric for retailers and on that front, KSS reported AprQ comps of +3.6%. While down a bit from the robust +6.3% comps in JanQ, these results were still above market expectations. Overall, KSS says it's very pleased with its strong start to fiscal 2018 as it continued to focus on priorities of driving traffic and operations.
KSS notes that it has now reported three consecutive quarters of positive comps, which increased on both a fiscal and a shifted basis. Further, KSS exceeded the high end of its margin expectations through continued focus on inventory management, while expenses were in-line with expectations. Gross margin edged up to 36.9% from 36.4% in the prior year period.
In sum, this was a very good start to the fiscal year for Kohl's. The stock is now flirting with a new 3-year high (was $69.48 in mid-January). It was good to see Kohl's come through with a strong result and comp after JC Penney (JCP) reported a mixed/disappointing result. It seems KSS was more on the Macy's side of the retail spectrum this quarter.
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