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Category: Stock Market and Kohl's
Date: 13 July 2020 Stock Price of Kohl's: $21.09 We take a look at the 1st quarter 2020 earnings report of Kohl's a retailer with over 1 100 stores in 49 states and annual sales around $19 billion. The group has been hit hard by the Covid-19 pandemic with their revenues for the 1st quarter 2020 being down almost -41% compared to the prior year.
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We entered the year in a strong financial position and our business was tracking to our expectations prior to the onset of the crisis. We immediately responded with actions to protect the health and safety of our associates and customers and to preserve our financial position "
About Kohl's
Kohl’s (NYSE: KSS) is a leading omnichannel retailer with more than 1,100 stores in 49 states. With a commitment to inspiring and empowering families to lead fulfilled lives, Kohl’s offers amazing national and exclusive brands, incredible savings and an easy shopping experience in our stores, online at Kohls.com and on Kohl's mobile app. Since its founding, Kohl's has given more than $700 million to support communities nationwide, with a focus on family health and wellness.
Kohl's store front. Image obtained from globalcosmeticnews.com
Overview of Kohl's 1st quarter 2020 earnings report
The data refers to the latest quarter unless specified otherwise
- Total revenues: $2.428 billion (down from $4.087 billion for the same quarter of the previous year)
- Total revenues decreased by -40.5% over the last 12 months
- Cost of merchandise sold: $1.787 billion (down from $2.415 billion for the same quarter of the previous year)
- Cost of merchandise sold decreased by -26% over the last 12 months
- So margin squeeze taking place at Kohl's as revenues showed a decline of a lot faster than their cost of merchandise sold
- Net loss: -$541million (down from $161 million for the same quarter of the previous year)
- Diluted loss per share: -$3.50 (down from $0.39 for the same quarter of the previous year)
- PE ratio of Kohl's: Since Kohl's is currently loss making a PE ratio cannot be calculated
- Diluted shares in issue: 155 million (down from 162 million for the same quarter of the previous year)
- Cash and cash equivalents: $2.039 billion
- Cash and equivalents per share: $13.15
- Cash and equivalents makes up 62.4% of Kohl's market capital
- Cash and equivalents makes up 12.8% of Kohl's total assets
- Merchandise inventories:: $3.557 billion
- Inventories makes up 22.4% of Kohl's total assets
- Stockholders equity in Kohl's: $4.790 billion
- Stockholders equity per Kohl's stock: $30.90
- So Kohl's is trading at times its 0.68 stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms then to trade at
- Cash generated from operations: $53.1 million
- Cash generated from operations per share (for 3 quarters of fiscal year) : $0.34
Kohl's management commentary on their 1st quarter 2020 earnings
MENOMONEE FALLS, Wis.--(BUSINESS WIRE)—May 19, 2020-- Kohl’s Corporation (NYSE:KSS) today reported results for the quarter ended May 2, 2020.
“We entered the year in a strong financial position and our business was tracking to our expectations prior to the onset of the crisis. We immediately responded with actions to protect the health and safety of our associates and customers and to preserve our financial position. I am incredibly proud of how our associates stepped up to face this unprecedented challenge with speed and agility. Our actions to manage cash outflow and increase liquidity have been instrumental in enhancing our position to navigate this crisis, and we believe our history of prudent capital management will continue to serve us well,” said Michelle Gass, Kohl’s chief executive officer.
“We have begun the rebuilding process, recently reopening about 50% of our stores across the country. In doing so, we have taken special care to equip our stores with the latest health and safety measures as we welcome back our associates and customers,” said Gass. “As we look ahead, we know this experience will have a lasting impact to customer behavior and the retail landscape, and we are evolving our strategies to ensure our relevance and to capture market share.”
“We entered the year in a strong financial position and our business was tracking to our expectations prior to the onset of the crisis. We immediately responded with actions to protect the health and safety of our associates and customers and to preserve our financial position. I am incredibly proud of how our associates stepped up to face this unprecedented challenge with speed and agility. Our actions to manage cash outflow and increase liquidity have been instrumental in enhancing our position to navigate this crisis, and we believe our history of prudent capital management will continue to serve us well,” said Michelle Gass, Kohl’s chief executive officer.
“We have begun the rebuilding process, recently reopening about 50% of our stores across the country. In doing so, we have taken special care to equip our stores with the latest health and safety measures as we welcome back our associates and customers,” said Gass. “As we look ahead, we know this experience will have a lasting impact to customer behavior and the retail landscape, and we are evolving our strategies to ensure our relevance and to capture market share.”
Actions Taken In Response to COVID-19
As part of the COVID-19 response, the Company has taken the following actions to preserve financial liquidity and financial flexibility:
As part of the COVID-19 response, the Company has taken the following actions to preserve financial liquidity and financial flexibility:
- Managed inventory receipts meaningfully lower,
- Significantly reduced expenses across the business inclusive of marketing, technology, operations and payroll,
- Decreased planned capital expenditures by approximately $500 million,
- Suspended share repurchase program,
- Suspended regular quarterly cash dividend beginning in the second quarter of 2020,
- Replaced and upsized revolver to $1.5 billion secured facility, and
- Issued $600 million notes due 2025.
Kohl's (KSS) stock price history
The image below, obtained from Google shows the stock price history of Kohl's (NYSE:KSS) for the last 5 years and it's not been a good time for Kohl's stockholders over the last 5 years. 5 years ago the stock was trading at $62.30 and its currently trading at $21.09 That's a loss of -66.1% suffered by Kohl's stockholders over the last 5 years.
The stock of Kohl's is trading at a lot closer to its 52 week low of $10.89 than it is to its 52 week high of $59.26 which to us is a clear indication that the short term sentiment and momentum of Kohl's stock is negative at this point in time.
The stock of Kohl's is trading at a lot closer to its 52 week low of $10.89 than it is to its 52 week high of $59.26 which to us is a clear indication that the short term sentiment and momentum of Kohl's stock is negative at this point in time.
Kohl's (NYSE: KSS) stock price history over the last 5 years
Recent coverage of Kohl's
The extract below covers the latest regarding Kohl's as obtained from Barrons.com
Kohl’s stock was jumping Wednesday, helped by an upgrade from Bank of America Merrill Lynch.
Analyst Lorraine Hutchinson boosted her rating on Kohl’s (ticker: KSS) to Buy from Neutral and added $7 to her price target, to $27, about 28% above where the stock was trading Wednesday morning.
She wrote that, while the department-store stocks, including Kohl’s, Macy’s (M), and Nordstrom (JWN), have all seen nearly identical share declines of around 60% in 2020, eventually “investors will begin to differentiate between business models,” which will be good news for Kohl’s. The company has “already shown superior reopening trends versus peers and we expect its off-mall positioning and value proposition will drive continued sales outperformance.”
Some 95% of Kohl’s stores are in non-mall locations, while its value focus and geographic footprint should help it recapture sales faster than peers, and “will allow it to recover more of its lost earnings over a multiyear time frame,” Hutchinson argued. In June, about 90% of Kohl’s stores had reopened and they were running around 75% of last year’s volumes, with even better numbers at locations opened the longest. Meanwhile, online sales have also been strong, rising 90% in May.
Read the full article here
Kohl’s stock was jumping Wednesday, helped by an upgrade from Bank of America Merrill Lynch.
Analyst Lorraine Hutchinson boosted her rating on Kohl’s (ticker: KSS) to Buy from Neutral and added $7 to her price target, to $27, about 28% above where the stock was trading Wednesday morning.
She wrote that, while the department-store stocks, including Kohl’s, Macy’s (M), and Nordstrom (JWN), have all seen nearly identical share declines of around 60% in 2020, eventually “investors will begin to differentiate between business models,” which will be good news for Kohl’s. The company has “already shown superior reopening trends versus peers and we expect its off-mall positioning and value proposition will drive continued sales outperformance.”
Some 95% of Kohl’s stores are in non-mall locations, while its value focus and geographic footprint should help it recapture sales faster than peers, and “will allow it to recover more of its lost earnings over a multiyear time frame,” Hutchinson argued. In June, about 90% of Kohl’s stores had reopened and they were running around 75% of last year’s volumes, with even better numbers at locations opened the longest. Meanwhile, online sales have also been strong, rising 90% in May.
Read the full article here
Kohl's store entrance inside a mall. Image obtained from Greenwichtime.com
Kohl's (NYSE: KSS) latest stock valuation
So what is Kohl's stock worth based on their 1st quarter 2020 earnings report? Based on their earnings report our valuation model provides a target price (full value price) for Kohl's at $57.60 a stock. We therefore believe the stock of Kohl's is undervalued
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price, which in this case is $57.60 thus a good entry point into Kohl's would be at $51.90 or below.
We expect the stock of Kohl's stock price to recover in coming weeks and months as the Covid-19 pandemic subsides to levels closer to our target price (full value price). Since the stock of Kohl's is trading at well below our suggested entry point we rate the stock of Kohl's as a Buy
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price, which in this case is $57.60 thus a good entry point into Kohl's would be at $51.90 or below.
We expect the stock of Kohl's stock price to recover in coming weeks and months as the Covid-19 pandemic subsides to levels closer to our target price (full value price). Since the stock of Kohl's is trading at well below our suggested entry point we rate the stock of Kohl's as a Buy
Next earnings release for Kohl's
It is expected that Kohl's will release their 2nd quarter 2020 earnings report towards the end of August 2020