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Kohl’s tops Q4 earnings, sales estimates; forecasts growth in 2021

Kohl’s Corp. ended a tough year on an upbeat note.

The department store retailer reported better-than-expected fourth-quarter profit earnings and sales along with an outlook that predicts sales will increase by mid-percentage this year.

Kohl’s reported its results as it has come under pressure from a group of activist investors who want to seize control of the company’s board. The investors think the retailer is not moving quick enough to address “stagnant sales” and “declining gross margins” — issues that it said predate the pandemic.

During an earnings presentation on Tuesday, Kohl's said it is not  planning to sell any of its real estate to then lease back, which is something the activist group has been pressuring the company to do to raise cash.

Kohl’s net income rose 29.4% to $343 million, or $2.20 per share, in the quarter ended Jan. 30, up from $265.0 million, or $1.72 per share, in the year-ago period. Adjusted earnings per share of $2.22 easily topped analysts’ estimates of $2.01. 

Sales fell to $5.88 billion from $6.54 billion a year earlier, topping the $5.86 billion forecast by analysts. Total revenue fell 10.1% to $6.1 billion. Online sales rose 22% and accounted for 42% of its total sales.

For the full year, Kohl’s had a net loss of $163 million, or $1.06 a diluted share, compared with earnings of $691 million, or $4.37 a share, in the year-ago period. Revenues was down 20.1% to $16 billion.

Kohl's said it expects 2021 net sales to increase in the mid-teens percentage range and EPS in the range of $2.45 to $2.95. The company also said that it plans to increase capital expenditures, reinstate dividend, resume share repurchase program and employ liability management strategies in 2021.

Kohl’s put its capital expenditure spending at $550 million to $600 million, including the launch of its Sephora partnership, the opening of its sixth e-commerce fulfillment center and store refresh activity.

“After an extraordinary year managing through the pandemic, we ended the year in a very solid financial position, and we enter 2021 with strong momentum," said Michelle Gass, CEO. "We are pleased with the progress we are making against our strategic initiatives and we are set up to deliver a multi-year improvement in sales and operating margin.”

Glass noted that newly announced initiatives will come to life at Kohl’s in the year ahead, “most importantly” the launch of its Sephora partnership in August. The company is also partnering with Eddie Bauer to offer a wide array of women’s, men’s and kids apparel from the 100-years-plus brand that will launch in up to 500 Kohl’s stores this fall, with an expanded assortment available online. Other recent partnerships include tie-ins with Land’s End and Calvin Klein. 

In an interview with CNBC, Glass said that Kohl’s stores got a boost in early January, as people came to return holiday items bought on Amazon and picked up something else while in the store. The company said at least 2 million new customers shopped at Kohl’s last year because of its Amazon returns service.

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