Riding financial growth wave, Kohl’s aims higher for months ahead

Expects to surpass 2023 goals this year

Kohl's Corp. headquarters in Menomonee Falls
Kohl's Corp. headquarters in Menomonee Falls

Last updated on November 19th, 2021 at 01:59 pm

In the wake of another record-setting quarter, Kohl’s Corp. has once again heightened its expectations for fiscal 2021 and is poised to exceed most of its 2023 goals by year’s end.

The Menomonee Falls-based retailer on Thursday reported earnings of $243 million for the third quarter, drastically up from a net loss of $12 million in the same period of 2020 and earnings of $123 million in 2019. Compared to last quarter, earnings were down 36%.

Net sales for the first three quarters of 2021 caught up to pre-pandemic levels at $12.25 billion. That’s up from $9.15 billion in the same period of 2020. For the first three quarters of 2019, net sales totaled $12.34 billion.

Kohl’s hit a record $1.65 adjusted diluted earnings per share in the third quarter. By comparison, adjusted earnings per share in Q3 of was 78 cents per share.

As a result of its positive performance, Kohl’s now expects full year net sales to increase in the mid-20s percentage range, up from a previous expectation of low 20s. Adjusted earnings per share is projected to jump to a midpoint of $7.20 from $5.95 previously.

Kohl’s continued to gain momentum toward profitability in Q3. The company’s operating margin was 8.4%, marking the highest Q3 operating margin in nine years. Last quarter’s 12.8% operating margin was the highest in 10 years for Q2. The metric has been a sore subject for Kohl’s over the past decade, falling 11.5% to 6.1% from 2011 to 2019.

Now, operating margin for the full year is anticipated in the 8.4% to 8.5% range compared to the previous 7.4% to 7.6%. If that guidance is met, Kohl’s will have surpassed its goal of 7% to 8% operating margin by 2023, as part of a new long-term growth strategy launched in 2019. The plan aims to drive top-line growth and weather industry disruption by prioritizing the active, beauty, and women’s apparel categories, building its loyalty program, and leveraging technology and digital sales channels.

“Our efforts to reposition Kohl’s are working,” said CEO Michelle Gass during Thursday’s earnings conference call. “All of the pieces of our strategy are coming together.”

Activewear made up 26% of net sales in Q3, thanks to growth of key national brands Nike, Adidas, Under Armour, and Champion; launch of Eddie Bauer; and the expansion of private brand FLX to additional stores.

Quarter three also saw the launch one of Kohl’s most significant partnerships ever: Sephora at Kohl’s, which debuted in 200 stores, including six in the Milwaukee area and online. Gass said the partnership had little impact on the quarter given its timing, but the company is pleased with the early results.

Despite the industry-wide rise of e-commerce and ongoing increase in Kohl’s digital traffic -with e-commerce sales up 33% over the past two years – in-store store sales still increased by double digits and continue to serve as the top vehicle for new customer acquisition, said Gass.

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Maredithe Meyer covers restaurants, retail, tourism, and sports and entertainment. She joined BizTimes in 2015, previously as an intern reporter. She earned a degree in journalism from Marquette University in 2017. When she's not on the job, Maredithe coaches field hockey and loves exploring her favorite city on earth, Milwaukee.

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