Kohl’s (KSS) reports Q4 2021 earnings

The Kohl’s logo is displayed on the exterior of a Kohl’s store on January 24, 2022 in San Rafael, California.

Justin Sullivan | Getty Images

Kohl’s on Tuesday reported fiscal fourth-quarter sales that came in below analysts’ estimates for the key holiday quarter, but investors lifted shares as the company issued upbeat revenue outlook for 2022 despite ongoing supply chain obstacles that roiled retailers and shrunk inventories.

Kohl’s per-share earnings also beat estimates, thanks to the company’s strategy to sell more goods at full price points. Despite lingering supply chain headwinds and other pressures from inflation and labor costs, CEO Michelle Gass said Kohl’s achieved an operating margin of 8.6% — two years ahead of schedule.

For fiscal 2022, Koh’s is calling for net sales to rise 2% to 3%. Analysts had been looking for year-over-year growth of 2.2%, according to Refinitiv.

“In 2022 will build on our momentum,” Gass said in a statement. She noted that the company plans to lean into its recent partnership with makeup retailer Sephora, in which it plans to open Sephora shop-in-shops at hundreds of Kohl’s stores.

The report comes as Kohl’s faces amplified pressure from activists to consider a sale, while one group is looking to take control of the retailer’s board. Last month, Kohl’s rejected the takeover offers on the table, which it said undervalued the business.

Here’s how Kohl’s did in its fourth quarter compared with what Wall Street was anticipating, according to a survey of analysts by Refinitiv:

  • Earnings per share: $2.20 adjusted vs. $2.12 expected
  • Revenue: $6.22 billion vs. $6.54 billion expected

Kohl’s net income for the three-month period ended Jan. 29 fell to $299 million, or $2.20 a share, compared with $343 million, or $2.20 per share, a year earlier. Earnings beat analysts’ estimates of $2.12 a share, according to Refinitiv.

Net sales grew to $6.22 billion from $5.88 billion a year earlier. That was light of estimates for $6.54 billion.

Kohl’s cited particular strength in its active wear business, which it said grew more than 40% in 2021. The retailer sells goods from top brands including Nike and Under Armour, alongside its own private labels for items such as leggings, sports bras and hoodies.

Activewear has been a growing category within the broader apparel space, fueled by more consumers looking for comfort during the pandemic and investing in their workout routines.

For fiscal 2022, on top of its sales targets, Kohl’s sees earnings per share in the range of $7.00 to $7.50, excluding items, compared with analysts’ expectations of $6.55 a share.

Kohl’s also announced on Tuesday it plans to double its annual dividend and buy back at least $1 billion of its stock this year.

The company is set to hold an investor meeting on Monday, where it will offer more guidance around its longer-term financial targets.

As of Monday’s market close, Kohl’s shares are up about 12% year to date, bringing the company’s market cap to $7.7 billion.

This story is developing. Please check back for updates.

Find the full earnings press release from Kohl’s here.