Why Kohl’s Corporation (NYSE: KSS) Stock is Falling

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Kohl’s Corporation (NYSE: KSS) stock plunged 10.17% though the company posted better than expected results for the first quarter of FY 21 and raised the outlook for full year 2021. The company has ended the quarter, with cash and cash equivalents of $1,609 million, long-term debt of $1,909 million and shareholders’ equity of $5,117 million. The company has reduced the long-term debt by over $500 million. Further, Kohl’s generated net cash from operating activities of $278 million during the three months ended May 1, 2021. The company is preparing for the upcoming launch of the Sephora partnership as well as the introduction of several new exciting brands this fall. Apart from favorable consumer spending backdrop, the company continues to see the key strategic initiatives gain traction and resonate with customers. The company witnessed strong momentum, especially in its stores during the quarter.

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KSS in the first quarter of FY 21 has reported the adjusted earnings per share of $1.05, beating the analysts’ estimates for the adjusted earnings per share to breakeven, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 69.5 percent to $3,887 million in the first quarter of FY 21, beating the analysts’ estimates for revenue of $3,568.3 million. The gross margin expanded 2,173 basis points to 39% in the first quarter. SG&A expenses increased 9.8% year over year to $1,170 million. Nevertheless, as a percentage of total revenues, SG&A expenses declined to 30.1% in the quarter from 43.9% in the prior-year quarter. The company has reported operating income of $273 million compared to an operating loss of $718 million posted in the prior-year quarter.

Additionally, the company has declared a quarterly cash dividend on the Company’s common stock of $0.25 per share. The dividend is payable June 23, 2021 to shareholders of record at the close of business on June 9, 2021.

The company now expects full year 2021 net sales to grow in mid-to-high teens percentage rate. Earlier, the company had expected the metric to grow in the mid-teens percentage range. Operating margin is now expected to be 5.7-6.1%, higher than the previous expectation of 4.5-5%. Further, Kohl’s now envisions earnings per share in the range of $3.80-$4.20, excluding non-recurring charges. The company had previously projected the metric in the range of $2.45-$2.95.

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