Kohl’s Corporation KSS shares fell as much as 18.5% in the pre-marketing session as the company reported dismal third-quarter fiscal 2024 results and lowered its full-year outlook. The company’s revenue and earnings declined year-over-year and missed the Zacks Consensus Estimate.

Kohl’s reported a profit of 20 cents per share, compared with a profit of 53 cents in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of 27 cents per share.

Find the latest EPS estimates and surprises in the Zacks earnings calendar.

Total revenue was $3,710 million, down from the prior-year quarter’s level of $4,054 million. Net sales fell 8.8% year-over-year to $3,507 million. Revenue missed the Zacks Consensus Estimate of $3,837.5 million. Comparable sales fell 9.3% year over year.

Kohl’s Corporation Price Consensus EPS Surprise Chart | Quote from Kohl’s Corporation

Kohl’s third-quarter results fell short of expectations as sales in its apparel and footwear sectors remained weak. While the company delivered strong performance in key growth areas such as Sephora, home decor, gift and impulse categories, as well as the opening of Babies “R” Us stores in 200 locations, these gains were not enough to offset declines in core business segments. As a result, Kohl’s is adopting a more conservative financial outlook for the year, reflecting its underperforming performance in the third quarter and expectations of a highly competitive holiday season.

Kohl’s gross margin increased 20 basis points (bps) to 39.1% in the quarter. SG&A expenses fell 5.1% to $1,291 million. The share of SG&A expenses in total revenue increased by 125 basis points (bps) to 34.8%.

KSS reported operating profit of $98 million, down from $157 million in the year-ago period. Operating profit margin fell 120 basis points to 2.7%.

The Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $174 million and shareholders’ equity of $3,804 million. The company generated operating cash flow of $52 million for the nine months ended November 2, 2024.

Management expects capital expenditures of nearly $500 million in 2024 (including expanding collaboration with Sephora and store-related investments).

On November 13, 2024, Kohl’s declared a quarterly cash dividend of 50 cents per share, payable on December 24 to its shareholders of record on December 11.

Additionally, Tom Kingsbury will step down as Chief Executive Officer of Kohl’s on January 15, 2025 and Ashley Buchanan will be named his successor.

The story continues

Image source: Zacks Investment Research

For fiscal 2024, Kohl’s forecast net sales to decline 7-8%, a correction from its previous expectation of a 4-6% decline. Comparable sales are expected to decline 6-7%, compared to the previous forecast of a 3-5% decline. Operating margin is expected to be between 3% and 3.2%, compared to the previous estimate of 3.4% to 3.8%. Management expects earnings per share between $1.20 and $1.50, revising previous guidance from $1.75 to $2.25.

The company’s shares have fallen 6.4% over the past three months, compared to the industry’s growth of 13.4%.

Decker DECK, a footwear and accessories retailer, currently carries a Zacks Rank #1 (Strong Buy). DECK delivered an average earnings surprise of 41.1% over the last four quarters.

You can see You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Deckers’ current fiscal year revenue and earnings suggests year-over-year growth of 13.6% and 12.6%, respectively.

Dillard’s, Inc. DDS, a department store retailer, currently carries a Zacks Rank #1. DDS has averaged an earnings surprise of 8.8% over the last four quarters.

The Zacks Consensus Estimate for Dillard’s revenue for the current fiscal year suggests a year-over-year decline of 5.1%.

Urban Outfitters Inc. URBN is a lifestyle specialty retailer offering fashion apparel and accessories, shoes, home decor and gift items. It currently has a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for Urban Outfitters’ current fiscal year sales and earnings suggests an increase of 5.8% and 12.3%, respectively, from the prior-year figures. URBN has averaged an earnings surprise of 17.6% over the last four quarters.

Want the latest recommendations from Zacks Investment Research? Today you can download the 7 best stocks for the next 30 days. Click here to get this free report

Kohl’s Corporation (KSS): Free stock analysis report

Dillard’s, Inc. (DDS): Free Stock Analysis Report

Deckers Outdoor Corporation (DECK): Free stock analysis report

Urban Outfitters, Inc. (URBN): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research