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Kohl's (KSS)
NYSE:KSS
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Kohl's
(NYSE:KSS)63Neutral
Positive Factors
Adjacent categories
Adjacent categories such as beauty, home, and baby remain positives, and margin execution has been solid.
New CEO Perspective
The new CEO brings a fresh perspective, and a store closing program should be on a list of new things to try.
Negative Factors
CEO Transition Concerns
The departure of CEO Tom Kingsbury is a loss for the company, and it will be difficult to replace him.
Dividend Sustainability
Concerns over the sustainability of the dividend and the high payout ratio limit financial flexibility.
Revenue Challenges
Kohl's revenue challenges attributed to traffic declines and a reduction in private label brand receipts.
Kohl's (KSS) vs. S&P 500 (SPY)
Market Cap
$1.27B
Dividend Yield17.65%
Average Volume (3M)7.47M
Price to Earnings (P/E)5.1
Beta (1Y)0.99
Revenue Growth-4.33%
EPS GrowthN/A
CountryUS
Employees96,000
SectorConsumer Cyclical
Sector Strength53
IndustryRetail - Discretionary
Share Statistics
EPS (TTM)2.22
Shares Outstanding111,317,505
10 Day Avg. Volume7,898,809
30 Day Avg. Volume7,474,027
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.08
Price to Cash Flow (P/CF)-1.60
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$11.17Price Target Upside-1.76% Downside
Rating ConsensusModerate Sell
Number of Analyst Covering6
Kohl's Business Overview & Revenue Model
Company DescriptionKohl's Corporation (KSS) is a leading American department store retail chain, founded in 1962 and headquartered in Menomonee Falls, Wisconsin. The company operates over 1,100 stores across the United States, offering a wide range of products, including apparel, footwear, accessories, beauty products, and home goods. Kohl's targets middle-income families and provides value-oriented pricing, with a focus on national brands, exclusive merchandise, and private label products.
How the Company Makes MoneyKohl's makes money primarily through the sale of merchandise in its retail stores and through its online platform. The company's key revenue streams include apparel and accessories, which account for a significant portion of its sales. Kohl's also generates revenue from home products and seasonal merchandise. The company utilizes a combination of national brands and private labels to cater to a broad customer base. Additionally, Kohl's has partnerships with well-known brands and designers to offer exclusive products, enhancing its competitive edge and appeal. Its loyalty programs and Kohl's Cash incentives drive repeat purchases and customer retention, supporting consistent revenue generation.
Kohl's Financial Statement Overview
Summary
Kohl's financial performance reveals stability in cash generation despite declining revenue and profitability margins. The company faces high leverage risks due to increased debt, but maintains a consistent cash flow which supports financial stability.Income Statement
Kohl's shows a declining trend in revenue over recent years, with total revenue decreasing from 2020 to the TTM period. The gross profit margin in TTM is approximately 36.8%, which is stable compared to past data. However, the net profit margin has weakened to 1.47% in TTM from higher values in previous years. EBIT and EBITDA margins also show a downward trend, reflecting reduced operational efficiency.65
Positive
Balance Sheet
Kohl's balance sheet indicates a high debt-to-equity ratio in the TTM period due to increased total debt, leading to potential leverage risk. The equity ratio stands at 100% due to a reporting anomaly, suggesting all assets are financed by equity, which requires closer scrutiny. Return on equity is 1.64% in TTM, showing reduced profitability compared to past years.60
Neutral
Cash Flow
The operating cash flow to net income ratio is robust, indicating strong cash generation relative to net earnings. Although the free cash flow has grown from the previous annual period, the free cash flow to net income ratio suggests moderate efficiency in cash utilization. The company has consistently generated positive operating cash flow, supporting its financial stability.70
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 16.78B | 17.48B | 18.10B | 19.43B | 15.96B | 19.97B | Gross Profit |
| 6.17B | 6.23B | 6.64B | 8.00B | 5.59B | 7.83B | EBIT |
| 606.00M | 717.00M | 246.00M | 1.68B | -300.00M | 1.10B | EBITDA |
| 1.35B | 1.47B | 1.05B | 2.32B | 612.00M | 2.02B | Net Income Common Stockholders |
| 247.00M | 317.00M | -19.00M | 938.00M | -163.00M | 691.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 183.00M | 183.00M | 153.00M | 1.59B | 2.27B | 723.00M | Total Assets |
| 14.01B | 14.01B | 14.35B | 15.05B | 15.34B | 14.55B | Total Debt |
| 7.38B | 7.38B | 7.57B | 6.79B | 6.74B | 6.12B | Net Debt |
| 7.19B | 7.19B | 7.41B | 5.20B | 4.47B | 5.40B | Total Liabilities |
| 10.12B | 10.12B | 10.58B | 10.39B | 10.14B | 9.11B | Stockholders Equity |
| 3.89B | 3.89B | 3.76B | 4.66B | 5.20B | 5.45B |
| Cash Flow | Free Cash Flow | ||||
| 759.00M | 591.00M | -544.00M | 1.67B | 1.00B | 802.00M | Operating Cash Flow |
| 841.00M | 1.17B | 282.00M | 2.27B | 1.34B | 1.66B | Investing Cash Flow |
| -434.00M | -562.00M | -783.00M | -570.00M | -137.00M | -837.00M | Financing Cash Flow |
| -423.00M | -576.00M | -933.00M | -2.38B | 347.00M | -1.03B |
Kohl's Technical Analysis
Negative
11.37
Price Trends
12.96
Negative
14.98
Negative
17.58
Negative
Market Momentum
-0.46
Positive
32.64
Neutral
16.85
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KSS, the sentiment is Negative. The current price of 11.37 is below the 20-day moving average (MA) of 11.96, below the 50-day MA of 12.96, and below the 200-day MA of 17.58, indicating a bearish trend. The MACD of -0.46 indicates Positive momentum. The RSI at 32.64 is Neutral, neither overbought nor oversold. The STOCH value of 16.85 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KSS.
Kohl's Risk Analysis
Kohl's disclosed 20 risk factors in its most recent earnings report. Kohl's reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Kohl's Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $136.85B | 28.58 | 59.57% | 1.21% | 3.95% | ― | |
75 Outperform | $6.19B | 10.57 | 32.07% | 0.27% | -4.13% | -17.60% | |
72 Outperform | $14.62B | 31.54 | 17.02% | ― | 12.18% | 60.91% | |
67 Neutral | $4.00B | 15.46 | 35.66% | 3.13% | 3.57% | 120.60% | |
63 Neutral | $1.27B | 5.13 | 1.64% | 17.65% | -4.33% | ― | |
63 Neutral | $3.71B | 22.47 | 0.98% | 4.96% | -2.68% | -75.81% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% |
* Consumer Cyclical Sector Average
Performance Comparison
KSS
Kohl's
11.37
-14.01
-55.20%
DDS
Dillard's
367.45
-16.02
-4.18%
M
Macy's
13.36
-6.12
-31.42%
JWN
Nordstrom
24.26
4.11
20.40%
TJX
TJX Companies
121.74
25.64
26.68%
BURL
Burlington Stores
230.27
18.16
8.56%
Kohl's Earnings Call Summary
Earnings Call Date: Nov 26, 2024 | % Change Since: -35.91% | Next Earnings Date: Mar 11, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong performance in gross margin management and growth in specific areas like Sephora and pet business. However, it also revealed significant challenges, including declines in net and comparable sales, weather impacts, and increased expenses. Efforts to reposition the company and improve digital strategy are ongoing, but the mixed results indicate balanced achievements alongside setbacks.Highlights
Gross Margin and Expense Management
Kohl's achieved a gross margin of 38.9% in Q3, an increase of 158 basis points compared to last year, driven by lower freight costs and reduced digital-related costs. Year-to-date gross margin was 39%, up 56 basis points from last year.
Sephora Sales Growth
Comparable beauty sales in Sephora shops opened in 2021 and 2022 increased more than 30% in Q3, with total beauty sales increasing more than 70%, driving additional beauty share gains.
Inventory Reduction
Inventory was reduced by 13% compared to last year, exceeding the goal of a mid-single-digit decline, positioning the company well for the holiday season.
Pet Business Growth
Kohl's pet business sales increased more than 40% in Q3, supported by an expanded in-store space and a broader assortment of products.
Lowlights
Decline in Net and Comparable Sales
Net sales decreased by 5.2%, and comparable sales were down 5.5% in Q3. Digital sales were down 16.5% due to the transition to omnichannel pricing.
Weather Impact on Sales
Warmer weather during late September and October affected demand for fall seasonal goods, particularly in apparel, with regional sales declines in the Midwest, Mid-Atlantic, and Northeast.
Increased Interest Expense
Interest expense increased by $8 million to $89 million in Q3 due to increased revolver borrowings.
Challenges in Apparel and Footwear
Weakness was noted in cold weather apparel businesses during Q3, with further work needed to improve overall apparel and footwear performance.
Company Guidance
During the Kohl's Q3 2023 earnings call, several key metrics and guidance updates were shared by the executives. Net sales decreased by 5.2%, with comparable sales down 5.5% and digital sales declining 16.5%, primarily due to the elimination of online-only promotions. Despite these setbacks, Kohl's reported a positive gross margin of 38.9%, a 158 basis points increase from the previous year, attributed to lower freight costs and disciplined inventory management, which saw a reduction by 13% at the end of the quarter. The company's store comparable sales were down approximately 1%, yet Sephora at Kohl's contributed positively with beauty sales increasing by more than 70%. For fiscal year 2023, Kohl's adjusted its net sales guidance to a decrease between 2.8% and 4% compared to 2022, while maintaining an operating margin forecast of approximately 4%. Earnings per diluted share are now expected to be between $2.30 and $2.70. The focus remains on strategic priorities such as enhancing customer experience, simplifying value strategies, and strengthening the balance sheet, with an aim to reduce inventory further and manage expenses efficiently.Kohl's Corporate Events
Business Operations and Strategy
Kohl’s Announces Fulfillment Center and Store Closures
Neutral
Jan 10, 2025
Kohl’s Corporation announced plans to close its San Bernardino E-commerce Fulfillment Center and 27 underperforming stores by mid-2025 as part of its strategy to optimize operations and enhance efficiency. These actions are expected to incur pre-tax charges of $60 million to $80 million, but they are not anticipated to affect the company’s financial outlook for 2024, as these charges will be excluded from non-GAAP financial measures. The closures are intended to support the long-term health of Kohl’s business by leveraging newer technological capabilities and reallocating resources more effectively.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.