Here's How Kohl's (KSS) Is Positioned Ahead Of Q4 Earnings

Kohl's Corporation (NYSE:KSS) is slated to release fourth-quarter fiscal 2019 results on Mar 3. The department store chain delivered a negative earnings surprise of 12.9% in the last reported quarter. Also, the company’s earnings underperformed the Zacks Consensus Estimate by 4.2%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for fourth-quarter earnings has been unchanged over the past 30 days at $1.92 per share. This suggests a decline of 14.3% from the year-ago period’s reported figure. Further, the consensus mark for revenues is pegged at $6,803 million, indicating a dip of 0.3% from the figure reported in the year-ago quarter.

The Zacks Consensus Estimate for fiscal 2019 earnings stands at $4.76 per share. This suggests a plunge of 15% from the year-ago period’s reported figure. Further, the consensus mark for revenues is pegged at $19.6 billion.

Key Factors to Note

The holiday season, which coincides with the fiscal fourth quarter, did not turn out to be a blissful one for Kohl’s. The company’s holiday period comparable sales (comps) dipped 0.2% year over year. Although it saw strength in several key business areas like digital, beauty, active, children’s, men’s and footwear; softness in the women’s category impeded its performance during the period. Further, industry experts believe that increased promotions and escalated digital fulfillment costs have been a threat to Kohl’s comps and margins.

The disappointing performance compelled management to revise the guidance for fiscal 2019. Kohl’s now envisions fiscal 2019 bottom line at the lower end of the previously mentioned $4.75-$4.95 per share. Also, on its last earnings call, management had expected a 1.5-2% increase in SG&A expenses for fiscal 2019.

Nevertheless, Kohl’s has been making strong efforts to drive sales. To this end, its investments toward boosting the capabilities of online applications have improved consumer engagement. We note that its solid endeavors to boost mobile traffic have augmented the adoption of the Kohl app, making it a vital constituent of online sales.

Moreover, to improve online offerings, the company has been expanding its e-commerce fulfillment centers. Additionally, it has been focusing on strengthening in-store pickups. Apart from this, the company’s prudent moves to strengthen inventory position, gains from the Amazon (NASDAQ:AMZN) returns program and product launches bode well.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Kohl's this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Kohl's carries a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Costco (NASDAQ:COST) has an Earnings ESP of +0.20% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar Tree (NASDAQ:DLTR) has an Earnings ESP of +0.32% and a Zacks Rank #3.

Target (NYSE:TGT) has an Earnings ESP of +1.69% and Zacks Rank #3.

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