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Kohl's Beats Estimates, Guides for Low Double-Digit Sales Growth in 2021

By Rhian Hunt - Updated Mar 2, 2021 at 5:20PM

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The company, targeted by activist investors, continues its late February gains and predicts strong momentum.

Department store chain Kohl's (KSS -12.97%) outdid Wall Street consensus estimates with both its revenue and earnings per share when it reported its fourth-quarter 2020 results this morning, despite a 10.1% drop in revenue compared to the year-ago quarter. According to Zacks Equity Research, its $2.22 fourth-quarter EPS delivered a 113.5% positive surprise above the Wall Street consensus, while its $6.14 billion revenue beat the predictions by 0.29%.

Besides beating Wall Street's forecasts, the big retailer's adjusted quarterly EPS climbed 12% year over year. According to CEO Michelle Gass, the company "ended the year in a very solid financial position, and we enter 2021 with strong momentum," which Kohl's expects to continue in light of its $2.3 billion in cash and its upcoming Sephora partnership, among other factors.

A gold dollar sign and red up arrow representing sales growth.

Image source: Getty Images.

Kohl's guidance is also positive, predicting full-year 2021 net sales will increase in the mid-teen percentages, which represents an even larger gain given that its net sales dropped 10.1% in the most recent quarter. The company expects $2.45 to $2.95 EPS along with operating margin of 4.5% to 5%.

After its share price collapsed in early 2020 and remained deeply depressed through spring, summer, and autumn, Kohl's stock rocketed upward at the start of December. It has now reached its pre-pandemic levels again, and appears to be continuing its climb.

Just a week ago, its share value jumped 10.5% in one day, as activist investors Legion Partners Asset Management, Macellum Advisors, and Ancora Holdings attempted to leverage their 9.5% stake into a takeover of Kohl's board of directors. Given the energetic fourth-quarter results and 2021 guidance, however, it's unclear whether such new leadership would actually bring any additional benefit to the company or its shareholders.

 

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