Consumers are starting to cut back on their spending, and some retailers are feeling the pinch.
Kohl’s (KSS) earnings were up in the second quarter, but earnings were down 53% year-over-year.
Adjusted earnings per share came in at $0.52, above analyst estimates of $0.23 for the second quarter, according to Bloomberg data. Earnings per share were $1.11 in the same period last year.
Same-store sales fell 5.0%. This is lower than analyst estimates for a decline of 4.62%. Net sales fell 4.8% to $3.68 billion, slightly below estimates of $3.71 billion.
Kohl’s Sephora business has continued to prove its strength. On a call with investors, CEO Tim Kingsbury, who He took command again in FebruarySephora at Kohl’s, said Sephora at Kohl’s “exceeds” expectations and works to “attract new customers who shop more frequently.” Typically, Sephora’s customers are “younger, more diverse consumers,” Kingsbury added.
The stock was also down 14% year-over-year but was lower than analyst estimates.
Following the results, Kohl’s shares fluctuated in the premarket and were up 1% in early trade.
Here are Kohl’s results for the second quarter versus estimates, according to Bloomberg data:
Net sales: $3.68 billion versus an expected $3.71 billion
Adjusted EPS: $0.52 vs. $0.23 expected
Same store sales: -5% vs. -4.62% expected
gross profit margin: 39% vs. the expected 38.6%
Adjusted net income: 58% vs. 27.26%
the exams: -14%
What else to watch: credit card payments, and forecasts for 2023
Nor is Kohl’s immune from the recent surge in credit card debt and delinquency balances, as reported by Jana Heron of Yahoo Finance.
“Payment rates (are) low, losses are high” — a potential red flag for investors, said Gil Timm, Kohl’s chief financial officer.
“Credit losses have increased compared to last year which was obviously really down,” Tim added. “But as expected … we took early action because we expected that the macroeconomic environment would worsen and people would have less money in their bank accounts.”
However, payout levels are still higher than in 2019.
In the second quarter, the retailer launched a credit card promotion with Capital One (COF), which Tim said will “offer a new vehicle to customers who might not want a private credit card” in another effort to win over younger consumers.
For the full year 2023, Kohl’s expects net sales to decline between 2% and 4%. Operating margin is expected to be 4% while adjusted earnings per share is expected to be in the range of $2.10 to $2.70.
“Many of our strategic efforts are just underway, which we expect to contribute incrementally in the latter half of the year, and even more so in 2024 and beyond,” CEO Tim Kingsbury said in the statement, adding that the team is “confident in our long-term opportunity.” “
In the second quarter, the company opened 200 Sephora stores and plans to open 50 more this month, bringing the total number to 850. The company is also opening 45 smaller 750-square-foot stores in the remainder of the chain in October, reaching 900 stores by the end of 2023.
What analysts said about the advance earnings:
Like last (quarter) KSS posted another bottom line win, primarily driven by an improving SG&A (although sales/GM was also slightly better than the consensus). (Management) also reaffirmed its annual guidance of 2.10-2.70. $2.38 consensus Although trends aren’t good on an absolute basis, they don’t look like they’re getting worse, and the stock is in better shape now (down 14% in Q2 versus down 6% in Q1). Earnings (positive given that FL just cut it) and there have been no alarm bells on its credit business (as M.) We await the call to hear about current trends. -Paul LeGuise, City
Brooke DiPalma is a correspondent at Yahoo Finance. Follow her on Twitter at @BrookeDiPalma Or email her at firstname.lastname@example.org.
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