Kohl’s, Inc. reported a decline in fourth-quarter earnings but they topped Wall Street estimates. Sales in the quarter rose 5.8 percent. Kohl’s provided an upbeat outlook for the year.

In the quarter ended January 29, reported income fell 13 percent to $299 million from $343 million. EPS was $2.20 in each period due to fewer shares outstanding. Kohl’s repurchased $548 million of shares in the quarter and $1.355 billion of shares in 2021

On a non-GAAP basis adjusted to excluded non-recurring items, earnings reached $299 million against $346 million, representing a decline of 14 percent. EPS was down 1 percent to $2.20 from $2.22 a year ago but topped Wall Street’s consensus estimate of $2.10.

Sales in the quarter rose 5.8 percent to $6,499 million from $6,141 million a year ago. Sales were slightly below Wall Street’s consensus target of $6,782 million.

Gross margins in the quarter improved 124 basis points to 33.2 percent from 32.0 percent.

In the full year, net earnings reached $938 million, or $6.32 a share, against a net loss of $163 million, or $1.06, in 2020. On a non-GAAP basis, earnings were $1,089 million, or $7.33, against a loss of $186 million, or $1.21, a year earlier.

Sales in the year climbed 21.8 percent to $19,433 million from $15,955 million.

Kohl’s said fourth-quarter earnings exceeded expectations and the full-year EPS of $7.33 eclipsed the company’s previous high of $5.60 in 2018.

“In 2021, we delivered all-time record earnings per share, significantly ahead of our expectations. Our operating margin of 8.6 percent exceeded our 2023 goal two years ahead of plan, a direct result of our efforts to restructure the business to be more profitable. We remain extremely confident in the future growth and cash flow generation of our business, and in 2022 will build on our momentum as we further scale key initiatives such as Sephora,” said Michelle Gass, Kohl’s chief executive officer. “We continue to see a lot of value in our company. We are reinforcing our commitment to driving shareholder value by doubling our dividend and planning on repurchasing at least $1.0 billion in shares in 2022. We look forward to sharing more details on our strategy and key initiatives, as well as our financial and capital allocation plans at our Investor Day event on March 7, 2022.”

2022 Financial Outlook
For the full year 2022, the company currently expects the following:

  • Net sales are expected to increase 2 percent to 3 percent as compared to the prior year;
  • Operating margin is expected to be in the range of 7.2 percent to 7.5 percent; and
  • Earnings per share are expected to be in the range of $7.00 to $7.50, excluding non-recurring charges 2022 Capital Allocation Outlook

The EPS guidance in the range of $7.00 to $7.50 is above Wall Street’s consensus estimate of $6.54.

For the full year 2022, the company currently expects:

  • Capital expenditures: approximately $850 million, including expansion of its Sephora partnership and store refresh activity;
  • Dividend: On February 28, 2022, Kohl’s Board of Directors declared a quarterly cash dividend on the company’s common stock of $0.50 per share. The dividend is payable on March 30, 2022 to shareholders of record at the close of business on March 16, 2022.
  • Share repurchase program: Kohl’s Board of Directors approved a $3.0 billion share repurchase authorization, and the company plans to repurchase at least $1.0 billion in shares in 2022 of which $500 million is expected to be repurchased through open market transactions or an ASR program executed in Q2 2022.

Photo courtesy Kohl’s