Earnings Preview: Kohl's Corp. - Analyst Blog
May 10 2011 - 11:00AM
Zacks
Kohl’s Corp.(KSS)
is scheduled to announce its first quarter 2011 results on May 12,
2011, and we see limited revisions in analyst estimates at this
point. Currently, the Zacks Consensus Estimate is 72 cents
per share and sales estimate is around $4,258 million.
Fourth Quarter
Overview
Kohl’s fourth quarter earnings
increased 18.6% from the year-ago period. The year-over-year
profits were primarily driven by improved merchandise margins,
strong inventory management and successful brand strategies.
For the full year, earnings came in
at $3.65 a share which was up 13% compared to $3.23 in fiscal 2009.
However, annual earnings were below the Zacks Consensus Estimate of
$3.73.
Net sales for the quarter recorded a
growth of 6.3% to $6.0 billion from $5.7 billion in the year-ago
quarter, on the back of market share growth. Revenues were in line
with the Zacks Consensus Estimate.
Annual revenues spurred 7.1% to
$18.4 billion which was ahead of the Zacks Consensus Estimate of
$18.3 billion.
Gross margin expanded 40 basis
points (bps) to 36.8%, powered by sales growth, prudent inventory
management and effective merchandising.
The strong performance in the
quarter was mainly driven by a 4.3% growth in same-store sales.
Further, prudent inventory management and effective merchandising
have boosted margin and we believe will continue doing the same in
the coming quarters.
Management
Guided
Driven by strong profits in fiscal
2010, the company provided first quarter and full fiscal 2011
earnings guidance. For the first quarter, the company expects
earnings to be in the range of 68 cents to 73 cents, whereas for
the full year earnings are projected in the rage of $4.05 to $4.25
a share.
The company anticipates total sales
to advance in the range of 4.0%–6.0% both in the first quarter and
fiscal 2011. The company projects same store sales to spike 2%–4%
in the first quarter and full year 2011 as well.
First-Quarter 2011 Zacks
Consensus
Analysts covered by Zacks expect
Kohl’s to post first-quarter 2011 earnings of 72 cents a share. The
current Zacks Consensus inched up 12.5% from the year ago period
and ranges within a low of 70 cents to 74 cents.
Agreement of
Analysts
Out of the sixteen analysts
providing estimates for the first quarter 2011, four downgraded
their estimates in the last 7 days for the quarter. Out of twenty
one analysts providing estimates for the fiscal 2011, four analysts
upgraded their estimates, while four other analysts downgraded
their estimates in last 7 days.
The limited number of changes to
estimates point to the fact that there was no major catalyst during
the quarter that could drive results. Consequently, most of the
analysts are sticking to the estimates they projected post fourth
quarter earnings.
Magnitude of Estimate
Revisions
There was no change in the
Zacks Consensus Estimates for the first quarter and fiscal 2011
over the past 30 days. However, the fiscal 2011 estimates moved
down by 3 pennies in the past ninety days.
Recommendation
We remain encouraged by the
company’s consistent merchandise mix over the past three years.In
addition, the company’s pricing strategy and overall
profitability trend comes due to a strong focus
on maintaining a low-cost structure. However, increased competition
from Target Corp. (TGT) is a concern.
Currently, Kohl’s has a Zacks Rank
#3 implying a short-term Hold recommendation.
KOHLS CORP (KSS): Free Stock Analysis Report
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