Kohl’s Corporation reported that net sales for the 14-week period ended February 3 decreased 1.1 percent year-over-year (YoY), to $5.7 billion. The fourth quarter included net sales of approximately $164 million from the 14th week and variance compared to the 13-week period ended January 28, 2023.

Comparable sales, which compare the 13-week period ending January 27, 2024 versus the 13-week period ended January 28, 2023, decreased 4.3 percent YoY.

Gross margin as a percentage of net sales was 32.4 percent for the fourth quarter, an increase of 937 basis points YOY.

Selling, general & administrative (SG&A) expenses decreased 4.0 percent YoY, to $1.6 billion. As a percentage of total revenue, SG&A expenses were 27.0 percent, a decrease of 82 basis points YoY.

Operating income was $299 million in Q4, compared to a $302 million loss in the prior-year quarter. As a percentage of total revenue, the operating margin was 5.0 percent, an increase of 1,005 basis points YoY.

Net income was $186 million, or $1.67 per diluted share, in the fourth quarter, compared to a net loss of $273 million, or a loss of $2.49 per diluted share, in the prior-year period.

Fiscal Year 2023 Results
Comparisons for the full year refer to the 53-week period ended February 3, 2024 versus the 52-week period ended January 28, 2023 unless noted otherwise:

  • Net sales decreased 3.4 percent YoY to $16.6 billion, including net sales of approximately $164 million from the 53rd week.
  • Comparable sales, which compare the 52-week period ending January 27, 2024 versus the 52-week period ended January 28, 2023, decreased 4.7 percent.
  • Gross margin as a percentage of net sales was 36.7 percent, an increase of 347 basis points YoY.
  • SG&A expenses decreased 1.3 percent YoY, to $5.5 billion. As a percentage of total revenue, SG&A margins were 31.5 percent, an increase of 67 basis points YoY.
  • Operating income was $717 million in 2023, compared to $246 million in 2022. As a percentage of total revenue, operating margin was 4.1 percent, an increase of 274 basis points YoY.
  • Net income was $317 million, or $2.85 per diluted share, in 2023, compared to a net loss of $19 million, or a loss of 15 cents per diluted share, in 2022.

Balance Sheet and Cash Flow

  • Inventory was $2.9 billion at quarter-end, a decrease of 10 percent YoY.
  • Operating cash flow was $789 million for the Q4 period and $1.2 billion for fiscal year 2023.

CEO Commentary
“2023 represented an important year for Kohl’s. We enhanced our store experience, expanded our partnership with Sephora, and invested in under-penetrated categories,” said Tom Kingsbury, CEO of Kohl’s. “We also simplified our value strategies and implemented new inventory management processes. The early success of our strategies is evident. Our store business had its best comparable sales performance since 2010, Sephora at Kohl’s continued to drive meaningful beauty sales growth, and we managed inventory down 10 percent at year-end. I want to thank the broader Kohl’s team for driving significant change to reposition the company for future growth.”

Kingsbury continued, “Looking ahead, we are incredibly focused on delivering comparable sales growth in 2024.

Outlook
For the full year 2024, which has 52 weeks compared to 53 weeks full year 2023, the company’s guidance includes the potential impact from credit card late fee regulatory changes in the second half of 2024. The company currently expects the following:

  • Net sales: A decrease of 1 percent to an increase of 1 percent.
  • Comparable sales: In the range of 0 percent to 2 percent.
  • Operating margin: In the range of 3.6 percent to 4.1 percent.
  • Diluted EPS: In the range of $2.10 to $2.70, excluding non-recurring charges.
  • Capital Expenditures: Approximately $500 million, including expansion of Sephora partnership and other store-related investments.

Dividend: On February 28, 2024, Kohl’s Board of Directors declared a quarterly cash dividend on the company’s common stock of 50 cents per share. The dividend is payable April 3, 2024 to shareholders of record at the close of business on March 20, 2024.

Image courtesy Kohl’s Corporation