Kohl's (KSS) Cuts View on Q1 Earnings Miss, Low Comparable Sales

Core Viewpoint - Kohl's Corporation reported disappointing first-quarter fiscal 2024 results, with both revenue and earnings declining year over year and missing the Zacks Consensus Estimate [1][3] Financial Performance - The company posted a loss of $0.24 per share compared to earnings of $0.13 in the same quarter last year, falling short of the Zacks Consensus Estimate of $0.04 [3] - Total revenues were $3,382 million, down from $3,571 million in the prior-year quarter, with net sales decreasing by 5.3% year over year to $3,178 million, missing the consensus estimate of $3,540 million [3] - Comparable sales decreased by 4.4%, although regular price sales showed growth in underpenetrated categories and strength in the Women's business and Sephora [4] Margins and Expenses - Gross margin improved by 48 basis points to 39.5%, exceeding expectations of a 40 basis point increase [5] - SG&A expenses decreased by 0.8% to $1,228 million, but as a percentage of total revenues, it increased by 166 basis points to 36.3% [5] - Operating income fell to $43 million from $98 million in the previous year, with the operating income margin contracting by 148 basis points to 1.3% [6] Cash Flow and Capital Expenditures - At the end of the quarter, Kohl's had cash and cash equivalents of $228 million and shareholders' equity of $3,813 million, with an operating cash flow usage of $7 million for the year ended May 4, 2024 [7] - The company anticipates capital expenditures of nearly $500 million for 2024, focusing on expanding its Sephora collaboration and store-related investments [7] Dividend Declaration - On May 15, 2024, Kohl's declared a quarterly cash dividend of $0.50 per share, payable on June 26, 2024, to shareholders of record as of June 12 [8] Updated Guidance - Kohl's expects net sales to decline by 2-4% in 2024, with comparable sales anticipated to decrease by 1-3%, a revision from earlier expectations of flat to 2% growth [9] - The operating margin is now projected to be between 3-3.5%, down from the previous estimate of 3.6-4.1% [9] - Management envisions earnings per share to be in the range of $1.25-$1.85 [9] Stock Performance - Shares of Kohl's have increased by 12.5% over the past six months, compared to the industry growth of 19.9% [10]