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Kohl’s shares rise on earnings beat, retailer promises big gains ahead in activewear, beauty

Kohl’s shares rose more than 5% Tuesday, as CEO Michelle Gass laid out the retailer’s plans to expand in activewear and personal care in 2021….

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A shopper prepares to pay for items at a Kohl’s department store in Peru, Illinois, May 16, 2019.

Daniel Acker | Bloomberg | Getty Images

Kohl’s shares rose more than 5% Tuesday, after Chief Executive Michelle Gass laid out the retailer’s plans to expand in activewear and personal care in 2021, two hot pockets of growth that have accelerated during the coronavirus pandemic.

Kohl’s reported a 13.3% decline in quarterly net sales during its third quarter, as the pandemic limited the number of people visiting its stores to buy work clothes and dress shoes. But the department store chain sparked hope about its chances for a stronger turnaround in the New Year.

“Some would call this the homebody economy, with people spending more time at home,” Gass said during a call with reporters. “It’s growing in importance. … And we’ve established ourselves as an active destination for the last five years, that we’re going to take to a whole new level.”

Kohl’s also said it is entering the holidays “well-positioned” to rival its peers and take advantage of the market share up for grabs in the wake of numerous retail bankruptcies and store closures this year. The retailer significantly cut its inventories during the latest quarter, putting it in a position where it will be less reliant on discounts during the holiday season.

Here’s how the retailer did during the third quarter ended Oct. 31 compared with what analysts were expecting, based on Refinitiv data:

  • Earnings per share: 1 cent, adjusted, vs. a loss of 43 cents expected
  • Net sales: $3.78 billion vs. $3.86 billion expected

For the quarter ended Oct. 31, the company reported a net loss of $12 million, or 8 cents per share, compared with net income of $123 million, or 78 cents per share, a year ago. Excluding one-time charges, Kohl’s earned a penny a share, better than the 43-cent loss expected by analysts.

Kohl’s net sales fell to $3.78 billion from $4.36 billion a year ago. Analysts were calling for $3.86 billion, according to Refinitiv estimates.

Total revenue dropped 14% to $3.98 billion from $4.63 billion a year earlier.

Same-store sales at Kohl’s, which track sales online and at Kohl’s stores open for at least 12 months, also fell 13.3%. Analysts, on average, were calling for an 11.39% decline.

But the company said it did report positive sales growth in three categories — athleisure, lounge and sleepwear — which it has been investing in heavily.

Kohl’s strategy heading into 2021 is to trim the amount of dressier merchandise it has in stores and focus more on adding active and comfortable clothing. It plans to launch a new athleisure brand, called FLX, next year, while expanding the amount of space devoted to activewear in its stores by almost 20%.

“Our vision is to be the most trusted retailer of choice for the active and casual lifestyle,” Gass said during a post-earnings conference call.

Kohl’s has also been bringing more casual wear brands into its stores, such as Lands’ End, which is known for its outwear and swimwear. The company currently offers the complete Lands’ End catalog online, and plans to double the number of stores that sell Lands’ End apparel in 2021, from 150 to 300.

Outside of apparel, Kohl’s said it plans to at least triple its sales in beauty, seeing this category as another growth opportunity, where it competes with the likes of Ulta Beauty and Sephora. But some of Kohl’s rivals are looking to grow in beauty, too. Target and Ulta earlier this month struck a deal to open makeup and skincare shops inside of hundreds of Target stores across the country.

Kohl’s is also testing a shop called Wellness Market in 50 stores, which includes personal care products, baby goods and pet items.

Beauty “is a small business for us today, but we’ve made steady progress over the last five years,” Gass said. “We see a lot of upside.”

The retailer is seen as having a leg up on mall-based department stores like Macy’s and Nordstrom, since most of its locations are in open-air shopping centers. But it still faces competition from the likes of Target and Walmart, with the latter reporting Tuesday same-store sales gains in the U.S. of 6.4%, and e-commerce sales growth of 79%.

Kohl’s also said it will reinstate its quarterly dividend in the first half of 2021, after pausing it earlier this year due to the pandemic. And in a bid to boost liquidity, it said it fully paid off a $1 billion balance on a revolving line of credit during the third quarter.

As of Monday’s market close, Kohl’s shares are down about 49% this year. Kohl’s has a market cap of $4.1 billion.

Find the full earnings press release here.

Source: https://www.cnbc.com/2020/11/17/kohls-kss-reports-q3-2020-earnings.html

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Stitch Fix shares surge as online styling service reports surprise profit

Stitch Fix shares jumped after the online shopping and styling service reported a surprise profit for its fiscal fourth quarter.

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The Stitch Fix application for download in the Apple App Store on a smartphone arranged in Hastings-on-Hudson, New York, U.S., on Saturday, June 5, 2021. Stitch Fix Inc. is scheduled to release earning on June 7.

Tiffany Hagler-Geard | Bloomberg | Getty Images

Stitch Fix shares jumped 14% in extended trading Tuesday after the online shopping and styling service reported a surprise profit for its fiscal fourth quarter.

Sales for the three-month period ended July 31 also came in higher than analysts were expecting, thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing more slowly, the company said.

Consumers have been splurging on new outfits in recent months, as many head back to school and return to social gatherings. Some have also citied the need for new clothes after either gaining or losing weight during the Covid pandemic.

Here’s how Stitch Fix did compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: 19 cents vs. a loss of 13 cents expected
  • Revenue: $571.2 million vs. $548 million expected

Net income attributable to shareholders was $28 million, or 19 cents per share, in the latest period. A year ago, it posted a net loss of $44.5 million, or 44 cents a share. Analysts had been looking for the company to book a loss of 13 cents per share.

Revenue grew to $571.2 million from $443.4 million a year earlier. That was better than analysts’ expectations for $548 million.

Stitch Fix reported nearly 4.2 million active clients, up 18% from a year earlier. The company said net revenue per active client was $505, surpassing the $500 threshold for the first time ever. Customers have been purchasing more items to keep at home, Stitch Fix said, as they have more brands and price points to choose from.

Stitch Fix defines active clients as people who either ordered a “Fix” subscription or bought an item directly from its website in the preceding 52 weeks from the final day of the quarter.

The company also said it had its lowest ever churn rate at the end of the period, meaning its customers are sticking around.

Last month, Stitch Fix finally opened up its direct-buy option, which is now known as “Freestyle,” to the public. This allows people to shop Stitch Fix for individual items of clothing, without needing to sign up for a subscription.

CEO Elizabeth Spaulding said this should help Stitch Fix grow its addressable market in the year ahead. The company’s next initiative will be to market and raise broader awareness around the offering, she said. Stitch Fix is preparing to roll out a national advertising campaign on the debut.

Early indications are that “Freestyle” is meaningfully accretive to the company’s revenue per active client metric, Spaulding told analysts on a conference call.

“Clients have agency, flexibility and choice while also experiencing a highly personalized shopping experience,” Spaulding said.

For its fiscal first quarter, Stitch Fix said it sees sales in a range of $560 million to $575 million. That’s below analysts’ expectations for $588 million.

For the upcoming fiscal year, Stitch Fix anticipates sales rising 15% or more from the prior year. Analysts polled by Refinitiv had been looking for an 18% increase.

While the entire retail industry is working through supply chain complications, Stitch Fix said it is seeing a small impact, but nothing that will hurt the business in the fall and winter months. The company said it is less reliant on Vietnam, where manufacturing has largely come to a standstill due to ongoing pandemic lockdowns in the region.

As of Tuesday’s market close, Stitch Fix shares have fallen nearly 39% this year. The company has a market cap of $3.8 billion.

Find the full press release from Stitch Fix here.

Sales for the three-month period ended July 31 also came in higher than analysts were expecting, thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing more slowly, the company said.

Source: https://www.cnbc.com/2021/09/21/stitch-fix-sfix-q4-2021-earnings.html

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Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis.

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