Can Kohl’s Stock Rebound After Falling 9% In A Month?

Kohl’s stock (NYSE: KSS), a department store that features apparel, footwear, accessories, soft home products, and housewares targeted to middle-income customers, has seen its stock decline by almost 9% over the last month (about 21 trading days), compared to the S&P 500 which was down almost 6% over the same period. In the recent Q4, Kohl’s generated $6.5 billion of revenue, up 5.8% year-over-year (y-o-y) but down 4.9% from the fourth quarter of 2019. That said, Kohl’s revenue did not recover as robustly as many other department-store chains, due in part to supply-chain challenges. In fact, Kohl’s rival Macy’s comparable sales grew 6% in its Q4, compared to Q4 2019, whereas Kohl’s sales declined over the same period. The bright point of the report was the company’s adjusted earnings per share which reached $2.20 in Q4 2021. While this figure was down marginally from the prior year, when Kohl’s booked significant one-time tax benefits, but was up 11% from the fourth quarter of 2019.

While Kohl’s slow sales recovery is concerning to some degree, the ongoing rollout of Sephora shops in most Kohl’s stores should help the company gain traction and normalize the inventory levels over the next two years or so. Kohl’s opened Sephora boutiques in 200 of its stores in 2021 and it plans to expand its partnership with the beauty retailer to 600 stores later this year and at least 850 locations in 2023. Other than this, the retailer also aims to open at least 100 small-format stores over the next four years to reach new customers in smaller markets. In addition, KSS is making use of loyalty programs and assortment upgrades to further grow its sales going forward. Despite these growth initiatives, Kohl’s 2022 goals for its sales and earnings growth seemed quite modest. For fiscal 2022, Kohl’s expects sales to rise 2% to 3% y-o-y while operating margin to normalize between 7.2% and 7.5% after hitting a multiyear high of 8.6% in 2021. The company’s management also estimates that EPS will reach somewhere between $7 and $7.50, almost flat y-o-y.

Now, is KSS stock poised to decline in the short term or are gains looking more likely? Based on our machine learning analysis of trends in the stock price over the last ten years, there is a 56% chance of a rise in KSS stock over the next month (twenty-one trading days). See our analysis on Kohl’s Stock Chance Of Rise for more details.

Calculation of ’Event Probability’ and ’Chance of rising’ using last ten years’ data

[1] Returns of 7.3% or higher over a five-day period on 196 occasions out of 2516 (8%); Stock rose in the next five days in 93 of these 196 instances (47%)

[2] Returns of -1.3% or lower over a ten-day period on 1012 occasions out of 2516 (40%); Stock rose in the next ten days in 555 of these 1012 instances (55%)

[3] Returns of -9.4% or lower over a twenty-one-day period on 379 occasions out of 2515 (15%); Stock rose in the next twenty-one days in 214 of these 379 instances (56%)

It is helpful to see how its peers stack up. KSS Peers shows how Kohl’s stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

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