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Kohl's (KSS) Posts Wider-Than-Expected Q1 Loss, Sales Fall

The deadly coronavirus that led to the closure of stores severely impacted Kohl's Corporation’s KSS first-quarter fiscal 2020 results. This operator of specialty department stores posted wider-than-expected loss for the quarter under review. Also, the company’s top line fell sharply from the year-ago period.

Nonetheless, the company took every step to safeguard its financial position amid the crisis that helped generate positive operating cash flow. Also, management informed "We have begun the rebuilding process, recently reopening about 50% of our stores across the country.”

To address challenges tied to the pandemic, Kohl's remains focused on lowering expenses, managing inventory receipts and curbing capital expenditures. It curtailed planned capital expenditures by roughly $500 million, and also hold-off share repurchase and suspend dividend payment beginning in the second quarter of fiscal 2020. It replaced and upsized revolver to $1.5 billion secured facility, and issued $600 million notes due 2025.

Shares of this Zacks Rank #3 (Hold) company have slumped about 58% in the past three months, compared with the industry’s decline of roughly 62%.

Kohls Corporation Price, Consensus and EPS Surprise

Kohls Corporation price-consensus-eps-surprise-chart | Kohls Corporation Quote

Let’s Delve Deep

Kohl's posted adjusted loss of $3.20 per share wider-than-the Zacks Consensus Estimate of loss of $1.79. This also compares unfavorably with adjusted earnings of 61 cents reported in the year-ago period. Lower net sales and increased interest expense hurt the company’s bottom-line results.

Total revenues came in at $2,428 million, down 40.6% from the prior-year period. The metric came below the Zacks Consensus Estimate of $2,620 million, after surpassing the same in the preceding quarter. Net sales plunged 43.5% to $2,160 million, however, other revenues grew 0.8% to $268 million in the quarter.

Gross margin contracted to 17.3% in the quarter under review from 36.8% in the year-ago period. Notably, SG&A expenses declined 16.4% to $1,066 million. However, as a percentage of total revenues, SG&A expenses increased to 43.9% in the quarter from 31.2% in the prior-year period. The company reported operating loss of $718 million against operating income of $118 million in the prior-year quarter.

Other Financial Details

Kohl’s, which shares space with J. C. Penney JCP ended the quarter with cash and cash equivalents of $2,039 million, long-term debt of $3,449 million and shareholders’ equity of $4,790 million. The company generated net cash from operating activities of $53 million during the quarter under discussion.

Don’t Miss These Bets

Alibaba Group Holding Limited BABA has a trailing four-quarter positive earnings surprise of 19.5%, on average. The stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Office Depot ODP with a Zacks Rank #2 has a trailing four-quarter positive earnings surprise of 32.6%, on average.

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