Kohl's Earnings, Outlook Offered 'Very Few' Silver Linings


27% profit every 20 days?

This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.


Kohl's Corporation (NYSE: KSS) reported “very weak” results for 1Q16, with the comps missing the lowered estimates and the worst since 1Q09.

MKM Partners’ Patrick McKeever maintained a Neutral rating on the company, while lowering the price target from $44 to $39.

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Disappointing 1Q16

McKeever mentioned that a “relatively bright spot” was that inventories declines 2 percent per store, while management was able to reduce expenses in response to weak sales.

However, the analyst pointed out that the rising wage pressures continued to be a cause for incremental concern, while stating that there did not appear to be a catalyst “that would drive a meaningful inflection in fundamental trends.”

McKeever also noted the high dividend yield of 5.7 percent, although the analyst expects “ample free cash flow for buybacks and to support/grow the dividend.”

Traffic Deteriorated

Same store sales fell 3.9 percent during 1Q, as compared to the estimate of 0.5 percent, while traffic declined 4.8 percent, partially offset by a 0.9 percent rise in average ticket.

“Unfortunately, the weak sales appear to reflect both macro and company specific factors, which could make a fix that much more difficult,” McKeever said.

The Outlook

Management reaffirmed its FY16 comp guidance of 0-1 percent, while stating that the remainder of the quarters for 2016 were expected to be better.

However, according to the MKM Partners’ report, “this seems too aggressive and could be a setup for future disappointments.”


27% profit every 20 days?

This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.


Posted In: Analyst ColorPrice TargetAnalyst RatingsMKM PartnersPatrick McKeever