US' Kohl's net sales decrease 8.8% YoY to $3.5 bn in Q3 FY24

Selling, general and administrative (SG&A) expenses of the company decreased 5.1 per cent YoY, to reach $1.3 billion in Q3 FY24. As a percentage of total revenue, SG&A expenses were 34.8 per cent, an increase of 125 basis points YoY. The operating income of the company stood at $98 million, compared to $157 million in the same quarter the prior fiscal. As a percentage of total revenue, operating income of the company was 2.7 per cent, a decrease of 120 basis points YoY, and net income was $22 million, or $0.20 per diluted share. This compares to net income of $59 million, or $0.53 per diluted share, in the prior fiscal. The inventory of the company was $4.1 billion, a decrease of 3 per cent YoY, and operating cash flow was a use of $195 million.

“Our third quarter results did not meet our expectations as sales remained soft in our apparel and footwear businesses. Although we had a strong collective performance across our key growth areas, including Sephora, home decor, gifting, and impulse, and benefitted from the opening of Babies ‘R’ Us shops in 200 of our stores, these were unable to offset the declines in our core business. Importantly, we delivered gross margin expansion and managed expenses tightly in the quarter,” said Tom Kingsbury, Kohl’s chief executive officer (CEO).

“We are not satisfied with our performance in 2024 and are taking aggressive action to reverse the sales declines. We must execute at a higher level and ensure we are putting the customer first in everything we do. We are approaching our financial outlook for the year more conservatively given the third quarter underperformance and our expectation for a highly competitive holiday season,” added Kingsbury.

Nine months (9M) fiscal year 2024 results

Kohl’s net sales for the 9M period decreased 6.1 per cent YoY, to $10.2 billion, with comparable sales down by 6.4 per cent. The gross margin of the company as a percentage of net sales was 39.4 per cent, an increase of 42 basis points. SG&A expenses decreased 3.4 per cent YoY, to $3.8 billion. As a percentage of total revenue, SG&A expenses were 34.8 per cent, an increase of 95 basis points YoY. The operating income was $307 million compared to $418 million in the prior fiscal. As a percentage of total revenue, operating income was 2.8 per cent, a decrease of 79 basis points YoY.

The net income of the company in 9M period was $61 million, compared to net income of $131 million in the prior fiscal, and diluted earnings per share (EPS) was $0.55, compared to $1.18 in the 9M of previous fiscal. The operating cash flow of the company was $52 million in 9M 2024. The long-term debt was reduced by $113 million through the redemption of the remaining 9.50 per cent notes due May 15, 2025.

Outlook

For full fiscal 2024, Kohl’s expects decrease in net sales of 7-8 per cent and a decline in comparable sales of 6-7 per cent. The operating margin is expected to be in the range of 3.0-3.2 per cent. The company expects diluted EPS to be in the range of $1.20-$1.50, and capital expenditures to reach approximately $500 million, including expansion of Sephora partnership and other store-related investments.

Fibre2Fashion News Desk (SG)