In a preview of fourth-quarter earnings, Kohl’s on Thursday said a 20 percent uptick in digital business drove 40 percent of net sales, and CEO Michelle Gass credited brick and mortar for “playing a critical role in supporting the heightened demand.”
Overall, the retailer said comparable sales tumbled 11 percent in the frame, “marking the third consecutive quarter of sequential improvement.” Diluted earnings are seen in the range of $1.00 to $1.05, which don’t factor in tax planning strategies, it added, ahead of the adjusted diluted earnings per share of 70 cents on revenue of $5.96 billion Wall Street estimated prior to Kohl’s announcement.
The result, Gass said, demonstrates “continued progress” as a result of the “strategic framework” Kohl’s shared in October, with quarterly performance topping expectations “across all key metrics.” Plus, she added, sales strengthened as the three-month period unfolded. “Our focus on gross margin showed further traction and we managed expenses tightly, which together strengthened our financial position,” Gass said.
Kohl’s believes these trends indicate that strategic initiatives will fuel top-line growth and boost operating margins. Gass pointed to a forthcoming Sephora launch as a significant growth driver, in addition to the arrival of Cole Haan products in stores and online this spring. The chain has taken additional steps to casualize its assortment, tapping Adidas and actor Zoe Saldana for activewear while debuting its own private-label athleisure-leaning brand, FLX.
“We look forward to sharing more on this and our other initiatives,” Gass said of the Sephora debut, “as well as providing more detail on our path to 7 percent to 8 percent operating margin, on our upcoming earnings call in March.”