Kohl’s Inc. significantly increased its earnings outlook for the year after reporting first-quarter earnings that came in well ahead of Wall Street’s targets.

Highlights of the quarter include:

  • First-quarter net sales and earnings exceed expectations and company raises full-year 2021 financial outlook;
  • First-quarter net sales increased 69.5 percent;
  • First-quarter diluted earnings per share of $0.09; adjusted diluted earnings per share of $1.05;
  • Strengthened financial position during the quarter, reducing long-term debt by over $500 million and ending with $1.6 billion in cash;
  • Raises full-year 2021 net sales to increase in the mid-to-high teen’s percentage range as compared to 2020, operating margin to be in the range of 5.7 percent to 6.1 percent, and adjusted earnings per share to be in the range of $3.80 to $4.20, excluding any non-recurring charges.

In the quarter ended May 1, sales grew 60.1 percent to $3,887 million from $2,428 million a year ago. Wall Street’s consensus estimate had been $3.48 billion. Kohl’s said net revenues jumped 69.5  percent. Net revenues represent the change in net sales versus the prior-year period.

Gross margin improved 2,173 basis points to 39.0 percent from 17.3 percent a year ago. Selling, general, and administrative expenses rose 9.8 percent to $1,170 from $1,066.

Net income came to $14 million, or 9 cents a share, against a loss of $541 million, or $3,52, a year ago.

Adjusted net income came to $165 million, or $1.05 a share, against a loss of $495 million, or $3.22, the prior year. Wall Street’s consensus estimate had been 4 cents. Adjusted results exclude loss on extinguishment of debt and Impairments, store closing, and other costs.

“We are very pleased with our strong start to 2021 with both sales and earnings materially exceeding expectations. Along with a favorable consumer spending backdrop, we continue to see our key strategic initiatives gain traction and resonate with customers. We saw momentum build through the quarter, especially in our stores where we continue to elevate the experience. We are eagerly preparing for the upcoming launch of our Sephora partnership as well as the introduction of several new exciting brands this fall,” said Michelle Gass, CEO, Kohl’s.

“We are positioned to capitalize on growth opportunities during the balance of 2021 and remain firmly on track to achieving our 2023 strategic goals. Based on our first-quarter results, we are raising our full-year 2021 guidance,” said Gass.

Kohl’s is raising its full-year 2021 financial outlook to include the following:

  • Net sales are now expected to increase in the mid-to-high teen’s percentage range compared to the previous expectation of mid-teens percentage rate increase;
  • Operating margin is now expected to be in the range of 5.7 percent to 6.1 percent compared to the previous expectation of 4.5 percent to 5.0 percent; and
  • Adjusted earnings per share are now expected to be in the range of $3.80 to $4.20, excluding any non-recurring charges, compared to the previous expectation of $2.45 to $2.95.

Photo courtesy Kohl’s