Kohls Corporation Reports Second Quarter 2024 Financial Results
Intellectia.AI Updated: 2024-08-28
Kohl’s Corporation Reports Second Quarter 2024 Financial Results
Kohl's Corporation (NYSE: KSS) today released its financial results for the second quarter ended August 3, 2024.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | YoY Change | Consensus Estimate |
|---|---|---|---|---|
| Revenue | $3.5 billion | $3.65 billion | -4.2% | $3.58 billion |
| Diluted EPS | $0.59 | $0.52 | +13.5% | $0.45 |
| Gross Margin % | 39.6% | 39.01% | +59 basis points | - |
| SG&A Expenses | $1.2 billion | $1.25 billion | -4.2% | - |
| Operating Income | $166 million | $163 million | +1.8% | - |
| Net Income | $66 million | $58 million | +13.8% | - |
| Inventory | $3.2 billion | $3.52 billion | -9% | - |
| Operating Cash Flow | $254 million | $430 million | -41% | - |
Kohl's reported a 4.2% decrease in total revenue, adjusting down to $3.5 billion, which was below the consensus estimate of $3.58 billion. However, diluted earnings per share (EPS) of $0.59 exceeded both the prior year’s EPS of $0.52 and the analyst consensus estimate of $0.45, supported by improved gross margins and rigorous inventory and expense management.
Segment Revenue Performance
| Segment | Performance YoY | Previous Guidance |
|---|---|---|
| Core Business | Decline due to challenging consumer environment | - |
| Sephora | Strong growth | Highlighted for expansion |
| Home Decor, Gifting, & Impulse | Strong growth | Highlighted as key growth areas |
| Partnership, Babies “R” Us | New Opportunity | Expected to capitalize |
Kohl's major revenue segment from its core business faced significant pressure due to a challenging consumer environment, leading to a year-over-year decline. In contrast, the company's partnerships with Sephora and new ventures such as Babies "R" Us, as well as categories like home decor, gifting, and impulse, exhibited strong growth and are projected to further drive revenues.
Operational Highlights
- Gross Margin: Increased 59 basis points to 39.6%
- SG&A Expenses: Reduced 4.2% year-over-year
- Net Income: Achieved $66 million, up from $58 million last year
- Inventory Management: Improved with a 9% decline in inventory levels
- Operating Cash Flow: Lowered to $254 million from $430 million
Comments from Company Officers
Tom Kingsbury, CEO, remarked, " We have taken significant action to reposition Kohl's for future growth. During the second quarter, customer spending discretion pressured our sales, even as transaction frequency increased. This obscured strong performance in key growth areas, including Sephora, home decor, gifting, and impulse. NULLtheless, we delivered a 13% increase in earnings due to robust margin and inventory management. "
Kingsbury added, " Looking forward, we are focused on leveraging our strategic initiatives and new opportunities such as our partnership with Babies 'R' Us. Our solid cash flow generation and healthy balance sheet will support our path to growth. "
Dividends and Share Repurchase Program
Kohl’s has announced a quarterly cash dividend of $0.50 per share, payable on September 25, 2024, to shareholders of record at the close of business on September 11, 2024.
Forward Guidance
Updated 2024 Financial and Capital Allocation Outlook: - Net Sales: Projected to decrease between 4% and 6% - Comparable Sales: Expected to decrease between 3% and 5% - Operating Margin: Anticipated to be in the range of 3.4% to 3.8% - Diluted EPS: Forecasted between $1.75 to $2.25 - Capital Expenditures: Approximately $500 million
Stock Price Movement
Following the earnings release, Kohl's stock experienced a 3.24% increase.
Kohl's remains steadfast in its strategic initiatives, aiming to drive future growth despite current market challenges. The company's operating efficiency, strong partnerships, and balanced capital strategy underline its resilient outlook.
