Kohl’s Corporation (NYSE:KSS) is gearing up to announce its fourth-quarter fiscal 2023 earnings on Mar 12, with expectations of bottom-line growth. Despite a 5.3% decline in the consensus mark for earnings over the past 30 days to $1.24 per share, it signifies a significant increase from the loss of $2.49 per share reported in the year-ago quarter. However, KSS has experienced a trailing four-quarter negative earnings surprise of 9.9%, on average.
The Zacks Consensus Estimate for revenues stands at $5.97 billion, indicating a slight decline of 0.8% from the $6.02 billion reported in the prior-year quarter.
Kohl’s has faced ongoing pressure in its online business, with digital sales declining by 16.5% in the third quarter of fiscal 2023. This decline was attributed to the removal of online-only promotions, raising concerns for the fourth quarter. Additionally, the company expects a net sales decline of 2.8-4% in fiscal 2023, further intensifying apprehensions for the upcoming quarter.
The company has been grappling with higher SG&A expenses, which rose by 1.9% to $1,360 million in the third quarter of fiscal 2023. As a percentage of total revenues, SG&A expenses increased by 235 basis points to 33.5%. This increase was driven by continued investments in Sephora shop openings, wages, and other store-related expenses, posing a threat to profitability if such costs persist.
However, Kohl’s progress towards key priorities, including enhancing customer experience, streamlining value strategies, and managing inventory and expenses efficiently, has been promising. Additionally, the focus on bolstering its home business, which presents significant growth potential, is noteworthy. In the third quarter of fiscal 2023, management introduced new products such as wall art, glassware, ceramic home decor, and barware, among others, which performed impressively in stores, particularly in the home category.
As Kohl’s navigates through these challenges and opportunities, investors await its fourth-quarter earnings report to gauge the company’s performance amidst a dynamic retail landscape.
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