Kohl’s raised its forecast for the year on the heels of its strong third-quarter performance.
Kohl’s delivered a better-than-expected third-quarter performance with earnings, sales and margins exceeding expectations as shoppers returned to its stores.
The department store company raised its forecast for the year on the heels of its strong quarterly showing.
Kohl’s net income rose to $243 million, or $1.65 per share, in the quarter ended Oct. 30, compared to a net loss of $12 million, or $0.8 per share, in the year-ago period. Analysts had expected earnings per share of $0.70.
Net sales rose 15.5% to $4.6 billion, topping estimates of $4.27 billion. Same-store sales, which include online and in-store, rose 14.7% in the third quarter, also more than expected.
Digital sales rose 6% in the quarter and 33% on a two-year basis. E-commerce accounted for 29% of total quarterly sales.
Kohl’s has been putting an increased emphasis on active and casual wear, and brand partnerships, that range from Eddie Bauer to Tommy Hilfiger. During the quarter, it began the rollout of the first round of its in-store Sephora shop formats to 200 stores. The concept is off to a great start, said Kohl’s CEO Michelle Gass in a statement. A total of more than 600 shops are expected to be open next year.
“Our strategic efforts to transform Kohl’s into the leading destination for the active and casual lifestyle continue to build momentum,” said Gass. “All of the pieces of our strategy are coming together and we remain incredibly confident in the future of our business. We are raising our full year 2021 guidance and continue to accelerate our share repurchase activity, reinforcing our commitment to driving shareholder value.”
On the company’s earnings call, Gass told analysts that the in-store Sephora shops are attracting younger and more diverse customers, with 25% of the shoppers new to Kohl’s. The Kohl’s locations with the shops have experienced a mid-single-digit lift to same-store sales compared with ones without the shops.
Kohl's raised its full-year sales expectations to growth in the mid-twenties percentage range, up from low-twenties percentage range growth. Adjusted earnings per share is now expected to be in the range of $7.10 to $7.30, up from $5.80 to $6.10 previously.
The company plans to repurchase $1.3 billion in shares in 2021 after repurchasing $506 million in the third quarter.