Kohl's Beats Q2 Earnings Estimates, Broadens View
Retailer Kohl’s Corporation (KSS) posted second quarter fiscal 2013 earnings of $1.04 per share, beating the Zacks Consensus Estimate by a penny. Earnings were within management’s expectation of $1.00 - $1.08 per share and climbed 4.0% from the prior-year quarter earnings of $1.00 per share. The upswing in earnings was due to top-line growth, gross margin improvement and tight expense control.
Sales and Margins
Net sales increased 2.0% from the year-ago level to $4.289 billion, on the back of improved comparable sales. Sales however missed the Zacks Consensus Estimate of $4.295 billion. Kohl’s comparable store sales were 0.9% in the reported quarter compared to a decline of 2.7% in the year-ago period. The company was able to manage its inventory and also contributed in e-commerce growth during the quarter.
Gross margin improved 10 basis points to 39.1%. Operating margin declined 40 basis points to 10.5% from the year-ago quarter due to higher operating expenses. Both selling, general and administrative expenses and depreciation expenses were higher in the quarter.
Store Update
The company did not open any store in the quarter. Last quarter, it had opened nine stores, ending the quarter with 1,155 stores in 49 states. Kohl’s has plans to open three new stores and remodel 30 more in the fall.
Other Financial Details
As of Aug 3, 2013, Kohl's cash and cash equivalents were $592 million compared with $518 million in the previous quarter. Long-term debt remained at $2.492 billion during the period compared with $2.492 billion.
During the quarter, the board of Kohl's declared a quarterly cash dividend of 35 cents per share, which will be paid on Sep 25, 2013 to shareholders of record as of Sep 11, 2013.
Guidance
Kohl’s has issued guidance for the third quarter of fiscal 2013. The company expects earnings in the range of 83 cents to 92 cents per share, sales to increase in the range of 1%–3% and comparable store sales to increase in the range of 0%–2% in the quarter.
For fiscal 2013, Kohl’s has broadened its earnings guidance from $4.15 - $4.45 per share to $4.15 - $4.35 per share.
Kohl’s now has a Zacks Rank #3 (Hold). Other retail and wholesale stocks that warrant a look include hhgregg Inc (HGG), Ross Stores Inc (ROST) and Delhaize Group (DEG). While hhgregg holds a Zacks Rank #1 (Strong Buy), Ross Stores and Delhaize carry a Zacks Rank #2 (Buy).
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