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What to Expect from Kohl’s in the First Quarter

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What to Expect from Kohl’s in the First Quarter PART 1 OF 5

What Analysts Expect for Kohl’s Top Line in the First Quarter

Wall Street projections

Analysts expect Kohl’s (KSS) to report sales growth of 2.8% to $4.0 billion in the first quarter, which is in stark contrast to a sales decline of 3.3% reported in the corresponding quarter last year. Kohl’s will announce its quarterly results on May 22.

What Analysts Expect for Kohl’s Top Line in the First Quarter

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Kohl’s is revamping its merchandise offerings, improving the omnichannel experience, and optimizing its marketing spending across channels. The company is also paying attention to its store base, especially to its smaller-format locations. All these initiatives are expected to drive sales.

However, a few days back, CNBC reported that Michael Binetti, an analyst with Credit Suisse, stated that 2018 had a much cooler start to spring than in the last two years, which could mar early spring apparel merchandise sales. He also added that Kohl’s sales were more sensitive to weather changes than those of other department stores. As a result, Kohl’s sales could disappoint in the first quarter.

Recap of fourth-quarter performance

Kohl’s sales came in at $6.8 billion in Q4 2017, beating analysts’ consensus estimate by 0.5%, while rising 9.2% on a YoY basis. The strong holiday season was the driving factor. The 53rd week added $170 million to the company’s sales. Comps (comparable store sales) were up 6.3% driven by strength in the footwear, home, men’s, and women’s apparel categories.

For the first quarter, Kohl’s has projected comps to be above the high end of its 2018 guidance. Its comps are projected to be in the range of 0% to 2% for 2018.

Expectations for peers

For the first quarter, analysts expect Macy’s (M) to report sales of $5.4 billion, representing ~1% growth on a YoY basis. Analysts expect JCPenney (JCP) to report sales of $2.6 billion, a ~3.5% decline on a YoY basis.

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