Kohl’s beats Street with Q4 swing to profit
Even as year-over-year sales declined, Kohl’s Corp. was able to shift from net loss to profit in the fourth quarter of fiscal 2023.
The department store retailer reported net income of $186 million for the quarter, which exceeded Wall Street expectations and was a significant improvement from the $273 million net loss it reported in the year-earlier period.
Net sales decreased 1.1% year-over-year, to $5.7 billion from $5.77 billion, in part due to net sales of approximately $164 million from the extra 14th week of the fourth quarter of fiscal 2022. Comparable sales declined 4.3%.
Kohl’s was able to swing to profit from loss despite declining sales due to factors including a more than nine-percentage-point increase in gross margin, as well as drops in selling, general & administrative (SG&A) expenses and inventory.
For the full fiscal year 2023 (ended Feb 3, 2024), Kohl’s reported net income of $317 million, compared to net loss of $19 million in fiscal year 2022. Net sales declined 3.4% to $16.59 billion from $17.16 billion, while comparable sales decreased 4.7%. Fiscal year 2022 had an extra 53rd week compared to the 52-week fiscal 2023 period.
For the full year 2024, which has 52 weeks compared to 53 weeks in full year 2023, the company’s guidance includes the potential impact from credit card late fee regulatory changes in the second half of 2024. Kohl’s currently expects the following:
- Net sales: A decrease of (1%) to an increase of 1%.
- Comparable sales: In the range of 0% to 2%.
- Diluted EPS: In the range of $2.10 to $2.70, excluding any non-recurring charges.
- Capital Expenditures: Approximately $500 million, including expansion of Sephora partnership and other store-related investments.
In his comments, Tom Kingsbury, Kohl’s CEO, cited the retailer’s new partnership to open branded in-store Babies“R”Us shops.
"2023 represented an important year for Kohl’s," said Kingsbury. "We enhanced our store experience, expanded our partnership with Sephora, and invested in underpenetrated categories. Looking ahead, we are incredibly focused on delivering comparable sales growth in 2024.
"Our strategic initiatives are positioned to build momentum and contribute more meaningfully, and we will partner with Babies 'R' Us to meaningfully expand our presence in the baby gear category which represents a compelling white space opportunity for Kohl’s," said Kingsbury. "Through our collective efforts Kohl’s is becoming more relevant to customers, which strengthens our conviction in our longer-term opportunity."
Based in Menomonee Falls, Wis. Kohl’s Corp. operates than 1,100 stores in 49 states as well as the Kohls.com e-commerce site and a consumer app.