Kohl’s Smashes Fourth-Quarter Sales and Earnings Estimates
Mid-market retailer Kohl’s (NYSE: KSS) posted fourth-quarter earnings per share of $2.22, up from $1.99 a year ago and including a tax benefit of $1.15 per share. Analyst consensus was $1.04 per share, according to Nasdaq, which the company beat even after considering the tax benefit. Revenue was down year-over-year, according to the company’s earnings statement, but still better than expected at $6.14 billion compared to $6.83 billion for 2019.
In addition to the good earnings, management announced that Kohl’s would be reinstating its dividend, which was suspended in 2020. The company will pay $0.25 per quarter to shareholders of record on March 17. It will also increase its share repurchase program from $200 million to $300 million, CNBC reports.
The results are interesting for two reasons. First, Kohl’s and its peers like JCPenney (NYSE: JCP) and Sears (OTCMKTS: SHLDQ) have been struggling. They don’t offer the fashion of higher-end online retailers or the value of Target (NYSE: TGT) or Walmart (NYSE: WMT). Although they have web sites, their value propositions were based in part on locations in convenient shopping centers. Kohl’s relies on highly promotional marketing, a tactic that every retailer had to adopt in the pandemic.
TheStreet.com reports that these results come at a time when activist investors have been pushing for operational improvements. Macellum Advisors, Ancora Holdings and Legion Partners Asset Management together hold a 9.5% stake in the company. They have nominated nine new directors and are pushing for other changes. The current management team would like to stop them, and posting good results is one way to do that.