Kohl's Has 'Competitive Advantages' Via Full-Family Offering, Says This Analyst

  • Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on Kohl's Corp  KSS with a price target of $35.00.
  • The analyst said the company reported a Q2 EPS of $1.11, mostly in-line with the estimate of $1.12.
  • RelatedKohl's Shares Drop As Inflation Affects Q2 Earnings; Cuts FY22 Outlook Sharply
  • Telsey added that the 8.1% revenue decline matched the company's guidance provided on July 1 when it announced the conclusion of its strategic review process.
  • Gross margin declined 290 basis points to 39.6% in the fourth quarter, below the consensus estimate for a 140-bp decrease to 41.1%, due to increased freight costs, product cost inflation, and elevated promotions.
  • The analyst cited the company is seeing customers make fewer shopping trips, spend less per transaction, and shift towards value-oriented private brands.
  • Sephora at Kohl's continues to exceed expectations, driving incremental sales and attracting new customers in stores, the analyst added.
  • Telsey continues to see competitive advantages for Kohl's within the department store group through its value-oriented, full-family offering in a convenient off-mall footprint.
  • The analyst also said the promotional activity looks to weigh on margins in the back half of the year as the company moves through elevated inventory.
  • Price Action: KSS shares are trading lower by 6.86% at $31.62 on the last check Thursday.
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