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Kohl's CEO Says Strong Earnings Are Just a StartKohl's CEO Says Strong Earnings Are Just a StartRivas, Teresa.Barron's (Online); New York Kohl's stock is higher early Tuesday, after the department store's upbeat fiscal- fourth-quarter report and the resumption of spending on dividends and stock buybacks. CEO Michelle Gass tells Barron's that the good news in the quarter is reflective not just of the past, but "what's in front of us." Kohl's said it earned $343 million, or $2.20 per share, up from $1.72 in the year-ago period; on an adjusted basis, which excludes one-time items like store closures and tax impacts, EPS in the latest quarter were $2.22, easily ahead of the $1.01 consensus estimate. Revenue in the latest quarter fell 10.1% to $6.14 billion. For the full year, the company expects EPS of between $2.45 and $2.95; the midpoint of $2.70 is a nickel above analysts' current expectations. In addition, Kohl's plans to resume a capital-allocation strategy for 2021, a move that includes increasing capital expenditures, reinstating a dividend— suspended in May 2020 —and a share-repurchase program of $200 million to $300 million. Kohl's stock is up 0.8% to $57.46 in recent trading. The shares are up 53.5% in the latest 12 months, and up 41.2% year to date. The report comes after a tumultuous time for Kohl's; the company is not only weathering the pandemic, but new activist investor demands and gearing up for what some analysts have called a transformational deal with LVMH Moët Hennessy-Louis Vuitton's (LVMH.Italy) Sephora cosmetics chain. CEO Michelle Gass spoke with Barron's following the results, and said that she's optimistic about the year ahead: "We exited the quarter and entered 2021 with momentum; the areas that we're focused on from a category and brand standpoint are working." While plenty of analysts have touted Kohl's active wear and athleisure Gass says the company isn't resting on its laurels, branching out into new outdoor products and transforming its brand portfolio. That includes the addition of Sephora, which will "quickly accelerate us as a beauty destination, attracting new, younger customers and elevating…the store experience." Also, Kohl's has "a lot of other levers, and we're seeing a lot of green shoots as we drive sales in a more-profitable way," Gass says, citing the company's investments in its omnichannel platform, tight inventory controls, and better supply-chain management. She notes that the company has been gaining market share in the department-store sector, and that Kohl's investments in connecting the digital and physical store base will continue to differentiate it from peers. She's upbeat about ongoing demand for new options like curbside pickup—"it's the fast-food version of apparel,"—and the opportunity that new digital customers present. If Kohl's can convert them into in-store shoppers as well, data show that they're likely to become more loyal, a key habit when mass vaccination makes time in public safer. "People are going to want to go back to shopping, it's entertainment, and they'll need things to travel and go back to work, and we're well positioned for that," Gass says. |
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