Earnings

Kohl’s Beats On Earnings, Announces Aldi Partnership

Kohl's

Kohl’s is showing signs of renewed strength as its Q4 earnings results filter in across the wires, bucking its rough recent history to log Q4 earnings and revenue that outstripped analyst estimates. The success was chalked up to tighter inventory controls and powerful sales growth during the holiday season, according to CNBC reports.

All in, earnings per share (EPS) came out to $1.99, well ahead of the $1.77 estimated. Revenue was $6.78 billion as opposed to the $6.74 billion expected by Wall Street, and same-store sale growth was up 6.3 percent compared to the anticipated 5.7 percent.

“We improved our merchandise margins through strong inventory management and improved promotional and permanent markdowns,” said CEO Kevin Mansell in a statement. “All areas [of Kohl’s] effectively managed their expenses.”

The company said new tax legislation boosted its profits by $136 million. Looking to fiscal, it had forecast same-store sales to be flat or up to 2 percent, with total revenue expected to be down 1 percent to up 1 percent. If all things go as planned, this year’s earnings will fall within in a range of $4.95 to $5.45 per share. Analysts had been calling for full-year earnings of roughly $4.72 a share.

Kohl’s is also committed to rethinking how it uses physical spaces, right-sizing its retail footprint and considering how to rent portions of its stores to grocery and convenience stores, among other options. The company revealed during its earnings call that it would tap grocery retailer Aldi as its first partner to sublet space in downsized stores.

It is also testing a smaller store format of roughly 35,000 square feet.

Mansell will step down as CEO in May, succeeded by Michelle Gass. Gass was critical in leading the Amazon-Kohl’s partnership announced in 2017, one that Kohl’s would like to expand this year. The retailer also announced continued investment in its mobile app — which allows shoppers to buy online and pick purchases up in stores — as well as its Kohl’s Cash rewards program and private-label lines like Sonoma and Tek Gear.

“This kind of thinking … shows that Kohl’s understands the need to give customers reasons to visit stores and is not afraid to experiment to achieve this,” said Neil Saunders, managing director of market research firm GlobalData Retail.

Kohl’s shares have risen approximately 12 percent so far in 2018, with its stock up more than 45 percent from a year ago — and up 4 percent in after-hours trading Wednesday (Feb. 28).

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