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MarketScreener Homepage  >  Equities  >  Nyse  >  Kohl's Corporation    KSS

KOHL'S CORPORATION

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Department-Store Woes Catch Up to Kohl's

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08/20/2019 | 12:43pm EST

By Suzanne Kapner

Kohl's Corp. on Tuesday reported its third consecutive decline in quarterly sales, though it said business improved toward the end of the period and it maintained its guidance for the year.

The results prompted concern by analysts and investors that the strong growth Kohl's had posted for most of last year, which had helped it buck a downward trend among department stores, has come to an end. The shares fell 5% by midday and are down about 43% over the past year.

"There can be no doubt that Kohl's has been blown off course," said Neil Saunders, a managing director with GlobalData Retail.

Total sales fell 3.1% to $4.4 billion for the period ended Aug. 3. Sales at stores open at least a year fell 2.9%

Net income dropped to $247 million from $292 million a year earlier on higher online shipping costs and steeper promotions to clear unsold goods.

Kohl's Chief Executive Officer Michelle Gass said business improved in the last six weeks of the quarter with sales at stores open at least a year growing by 1%. She noted that the positive sales trend continued into August as the company got off to a strong start for the back-to-school season.

Other department stores, including Macy's Inc. and J.C. Penney Co., reported disappointing results last week for their summer quarter, sending their shares lower. Walmart Inc. was one of the few standouts, continuing its string of strong growth.

Retailers are facing the added threat of high costs due to increased tariffs on goods imported from China. On Tuesday, Home Depot Inc. lowered its sales forecast for the current year, citing the potential impact of tariffs as well as higher raw-material costs.

Even retailers that posted higher sales are being judged harshly by investors. T.J. Maxx parent TJX Cos. on Tuesday said sales at stores open at least a year grew 2% in the recent period. That is on top of a 6% increase in the same period a year ago. Foot traffic to its stores has increased for 20 consecutive quarters.

Yet its shares fell 1.4% in midday trading to $50.81.

Analysts are concerned that T.J. Maxx and its sister chain Marshalls may be facing more competition as department stores offer deeper discounts and resale sites such as The RealReal Inc. and thredUP Inc. gain popularity.

Mr. Saunders of GlobalData said the above-average levels of discounting across many apparel retailers "gave those shoppers looking for bargains more choice and more reason to shop around, something that had a tangible impact on both T.J. Maxx and Marshalls."

Kohl's has been trying to combat sluggish sales with initiatives such as one that lets shoppers return items they bought on Amazon.com Inc. to any of its more than 1,100 stores -- no box required.

Ms. Gass said the Amazon returns partnership is bringing both new and existing customers into Kohl's stores, particularly at off-peak times. She said the venture is expected to be a profitable one for Kohl's.

The retailer is also partnering with designers to launch exclusive collections, such as one from Jason Wu that will arrive in stores for the holiday season. And it is partnering with Facebook Inc. to find emerging digital brands to showcase in its stores.

Write to Suzanne Kapner at Suzanne.Kapner@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
FACEBOOK 0.33% 199.36 Delayed Quote.52.08%
J. C. PENNEY COMPANY, INC. -3.51% 1.1 Delayed Quote.5.77%
KOHL'S CORPORATION 1.79% 47.08 Delayed Quote.-29.03%
MARSHALLS PLC 0.98% 775.5 Delayed Quote.66.85%
THE HOME DEPOT, INC. -0.51% 213 Delayed Quote.23.97%
THE TJX COMPANIES -0.52% 59.57 Delayed Quote.33.15%
WALMART INC. 0.42% 118.66 Delayed Quote.27.39%
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Financials (USD)
Sales 2020 18 904 M
EBIT 2020 1 211 M
Net income 2020 750 M
Debt 2020 2 368 M
Yield 2020 5,84%
P/E ratio 2020 9,94x
P/E ratio 2021 9,73x
EV / Sales2020 0,52x
EV / Sales2021 0,51x
Capitalization 7 492 M
Chart KOHL'S CORPORATION
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Technical analysis trends KOHL'S CORPORATION
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TrendsBearishNeutralNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 21
Average target price 51,26  $
Last Close Price 47,08  $
Spread / Highest target 52,9%
Spread / Average Target 8,89%
Spread / Lowest Target -15,0%
EPS Revisions
Managers
NameTitle
Michelle D. Gass Chief Executive Officer & Director
Frank V. Sica Chairman
Jill Timm Chief Financial Officer
Paul J. Gaffney Chief Technology Officer & Senior Executive VP
Stephen E. Watson Independent Director
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