Source: Dreamstime | Author: DeltaStock
Reading time: 2 minutes
The largest U.S. department store chain offered anything but a comforting earnings performance, blaming record-high inflation for the subpar sales performance. The company’s shares slid shortly after the news, declining a total of 31% since the year began.
Financial performance for Q2 2022
“Second quarter results were impacted by a weakening macro environment, high inflation and dampened consumer spending, which especially pressured our middle-income customers. We have adjusted our plans, implementing actions to reduce inventory and lower expenses to account for a softer demand outlook.”
Michelle Gass, CEO
According to Kohl’s, a major trend it has been observing for the past few quarters is that its customers tend to make fewer shopping trips. And when they did shop, they almost always went for the company’s cheaper in-house brands. Here’s how Kohl’s did for the period:
– Total revenue: $4.09 billion versus expectations for $3.85 billion
– Net income: $143 million, or below the $382 million achieved a year earlier
– Earnings per share: $1.11 versus expectations for $1.03
– Inventory levels: up 48% compared to a year ago due to the weak sales and its recent investment in the Sephora beauty brand
– Sales performance: the total sales for the period were down 8.1% to $4.09 billion, compared to the $4.45 billion achieved in the prior year
– Stock repurchase plan: on August 18, the company announced that it is entering an accelerated repurchase agreement of nearly $500 million in common stock
However, not all is doom and gloom, as Kohl’s has stated that its male customers bought more outfits in the quarter due to the heightened interest in outdoor gear, while its partnership with Sephora allowed it to sell a wide range of beauty products despite the higher prices.
Financial outlook for 2022
“While 2022 has turned out to be more challenging than initially expected, Kohl’s remains a financially strong company with significant long-term growth potential. Our $500 million accelerated share repurchase underscores our steadfast confidence in Kohl’s future and focus on creating shareholder value.”
Michelle Gass
At the moment, the Pennsylvania-based retailer plans on opening up 400 Sephora shops within its stores until the end of this year, with an extra 250 being planned for 2023. That being said, the slower sales did force the company to update its yearly financial outlook, which now reads the following:
– Net sales: a 5% to 6% decline compared to last year
– Earnings per share: forecasted to be between $2.80 and $3.20
– Operating margin: expected to stay within the 4.2% – 4.5% range
The main reason for Kohl’s to downgrade its guidance so dramatically lies in the now terminated talks of selling its business to The Vitamin Shoppe owner Franchise Group due to the deteriorating economic environment in the retail sector as of late.
Upcoming reports
See the full list of upcoming earnings reports for 22nd – 26th August in the tables below.
Monday, 22nd August 2022
| Country | Company | Fiscal period |
|---|---|---|
| USA | Palo Alto Networks Inc | Q4 2022 |
| USA | Zoom Video Communications Inc | Q2 2023 |
Tuesday, 23rd August 2022
| Country | Company | Fiscal period |
|---|---|---|
| USA | Intuit Inc | Q4 2022 |
| Ireland | Medtronic PLC | Q1 2023 |
| USA | Lannett Company Inc | Q4 2022 |
Wednesday, 24th August 2022
| Country | Company | Fiscal period |
|---|---|---|
| USA | Salesforce Inc | Q2 2023 |
| USA | Box Inc | Q2 2023 |
Thursday, 25th August 2022
| Country | Company | Fiscal period |
|---|---|---|
| USA | Gap Inc | Q2 2022 |
| USA | Dollar General Corp | Q2 2022 |
| USA | VMware Inc | Q2 2023 |
| USA | NVIDIA Corp | Q2 2023 |
Friday, 26th August 2022
| Country | Company | Fiscal period |
|---|---|---|
| USA | Dell Technologies Inc | Q2 2023 |
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