Kohl’s Inc. reported a small decline in earnings in the fourth quarter on flat same-store sales but both EPS and sales exceeded Wall Street’s targets.

In the quarter ended February 1, sales inched up 0.1 percent to $6.832 billion from $6.823 billion. Revenues topped analysts’ estimates of $6.523 billion. Same-store sales were flat against a 1.0 percent gain a year ago.

Earnings declined 3 percent to $265 million, or $1.72 a share, from $272 million, or $1.67, a year ago.

On an adjusted basis, earnings slid 16 percent to $308 million, or $1.99 a share, from $366 million, or $2.24, a year ago.  Wall Street’s consensus EPS estimate had been $1.88. Adjusted earnings exclude impairments, store closing and other costs, and the impact of the extinguishment of debt.

Gross margins eroded 83 basis points to 32.7 percent from 33.5 percent.

For the full-year, sales were down 1.3 percent to $19.97 billion from $20.2 billion. Same-store sales were down 1.3 percent versus a 1.7 percent gain the prior year.

Net income was down 14 percent to $691 million, or $4.37, from $891 million, or $4.84, a year ago. Adjusted earnings fell 17 percent to $769 million, or $4.86, from $927 million, or $5.60, a year earlier.

Michelle Gass, Kohl’s chief executive officer, said, “While 2019 was a year in which our financial results did not meet our expectations, it was also a year of innovation and investment that further strengthened Kohl’s differentiation in the market. We are encouraged by the acceleration of traffic and new customer acquisition in our stores and online driven by the unprecedented level of new brands and partnerships we launched during the year. I want to thank all of our associates for their ongoing commitment to Kohl’s and I am confident that we will build on our strengths in 2020 to stabilize and position the business for future growth.”

Initial 2020 Earnings Guidance
The company expects earnings per diluted share of $4.20 to $4.60 for fiscal 2020. This guidance is based on the following assumptions, but excludes any non-recurring charges:

  • Comparable sales in the range of negative 1 percent and positive 1 percent;
  • Gross margin as a percentage of sales decrease of 10 to 20 basis points as compared to 2019;
  • SG&A dollars increase of 1 percent to 2 percent over 2019;
  • Depreciation expense of $940 million;
  • Interest expense of $210 million; and
  • Effective tax rate of 24 percent to 25 percent.

Photo courtesy Kohl’s