Multiple Bidders, Key Executives Departure, Mixed Q1 Earnings - Lots Going On With Kohl's

  • Kohl's Corp KSS reported a first-quarter FY22 sales decline of 4.4% year-on-year to $3.71 billion, beating the consensus of $3.68 billion.
  • Gross margin for the quarter contracted by 69 basis points to 38.3%. The operating margin was 2.2%, and operating income for the quarter declined 70% Y/Y to $82 million.
  • Selling, general and administrative expenses increased 10.5% Y/Y to $1.3 billion.
  • Adjusted EPS of $0.11 missed the consensus of $0.70.
  • Kohl's held $646 million in cash and equivalents as of April 30, 2022.
  • "Following a strong start to the quarter with positive low-single digits comps through late March, sales considerably weakened in April as we encountered macro headwinds related to lapping last year's stimulus and an inflationary consumer environment," said CEO Michelle Gass.
  • Process Update: Regarding its review of strategic options, Kohl's said its Board engaged Goldman Sachs Group, Inc. GS to conduct a broad process, which to date has included engagement with over 25 parties.
  • Kohl's disclosed preliminary, non-binding proposals have been received. It has requested fully-financed final bids to be submitted in the coming weeks.
  • Kohl's quarterly cash dividend of $0.50 per share is payable on June 22, 2022, to shareholders of record on June 8, 2022.
  • Executive Departure: Kohl's disclosed in a regulatory filing that its Chief Marketing Officer Greg Revelle will be departing effective June 1, 2022. Chief Merchandising Officer Doug Howe is also leaving effective immediately.
  • Outlook: Kohl's cut the FY22 EPS outlook to $6.45 - $6.85 from $7.00 - $7.50, versus the consensus of $7.18. It sees FY22 sales growth of 0% - 1% (prior view 2% - 3%).
  • Price Action: KSS shares are trading lower by 8.18% at $39.60 on the last check Thursday.
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Posted In: EarningsM&ANewsGuidanceDividendsGeneralBriefs
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