Home Mutual Funds Kohl’s Posts Earnings Beat, Announces Babies“R”Us Partnership

Kohl’s Posts Earnings Beat, Announces Babies“R”Us Partnership

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Key Takeaways

  • Kohl’s shares ticked higher in early trading Tuesday as the department store chain posted results from a stronger-than-expected holiday quarter.
  • Net income and earnings per share both came in well above analyst projections.
  • The retailer also announced a new partnership with Babies“R”Us, with shops under the baby brand’s name opening in 200 Kohl’s locations later this year.

Kohl’s (KSS) shares edged 0.7% higher in early trading Tuesday as the department-store chain released results of a holiday quarter that beat analysts’ profit expectations.

Kohl’s posted a fiscal fourth-quarter profit of $186 million, or earnings per share (EPS) of $1.67, exceeding analyst estimates compiled by Visible Alpha. The figures were also well above those in the fourth quarter of the 2022 fiscal year, when Kohl’s posted a loss of $273 million or $2.49 a share.

This marks the fourth consecutive quarter that Kohl’s has beat analysts’ EPS estimates after a turbulent ending to 2022, including a sudden CEO departure. Kohl’s posted a $317 million profit for the full 2023 fiscal year, or $2.85 a share.

The retailer also posted guidance for the 2024 fiscal year, with expectations that net sales would range from a decrease of 1% to an increase of 1%, along with a full-year EPS range of $2.10 to $2.70. A dividend of 50 cents per share was approved by the Kohl’s board, and is set to be paid April 3 to shareholders as of March 20, 2024.

Kohl’s also announced a new partnership with WHP Global, the owner of the Babies“R”Us brand, with a plan to roll out Babies“R”Us-branded locations inside roughly 200 Kohl’s stores by the fall.

“We see significant opportunity in the baby gear category,” Kohl’s CEO Tom Kingsbury said, adding that Kohl’s partnering with Babies“R”Us is “another example of how we are finding new ways to optimize our assortment and further establish Kohl’s as the go-to brand for families.”

The partnership will likely resemble Kohl’s arrangement with makeup retailer Sephora, with a portion of store space dedicated to the brand. Kohl’s said the new Babies“R”Us sections will be anywhere from 750 to 2,500 square feet, offering a variety of baby products, and they will be placed next to the retailer’s existing baby section.

Customers will also be able to build a Babies“R”Us registry through the Kohl’s website, and can earn rewards through Kohl’s various programs with their Babies“R”Us purchases.

Kingsbury credited the Sephora partnership and a decrease in inventory of 10% from last year to $2.9 billion for the department store’s strong quarter, and said Kohl’s stores had their best comparable sales performance since 2010.

Kohl’s shares were up 0.7% at $27.38 at 10 a.m. ET Tuesday. The stock is down about 3% so far in 2024, but up 19% in the last 12 months.

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