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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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JPMorgan Chase beats profit estimates on strong trading, $5.2 billion release of loan-loss reserves

JPMorgan posted first-quarter profit of $4.50 a share, much higher than the $3.10 per share expected by analysts surveyed by Refinitiv.

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JPMorgan Chase on Wednesday reported profit and revenue that exceeded analysts’ expectations on robust trading results and a $5.2 billion benefit from releasing money it had previously set aside for loan losses that didn’t develop.

The bank posted first-quarter profit of $14.3 billion, or $4.50 a share including a $1.28 per share benefit from the reserve release, higher than the $3.10 per share expected by analysts surveyed by Refinitiv. Excluding the impact of a $550 million charitable contribution, which lowered earnings by 9 cents, the bank earned an adjusted figure of $4.59, exceeding the $3.10 estimate.

Companywide revenue of $33.12 billion exceeded the $30.52 billion estimate, driven by the firm’s trading operations, which produced about $1.8 billion more revenue than expected.

JPMorgan’s release of $5.2 billion in reserves is the biggest sign yet that the U.S. banking industry is now expecting to have fewer loan losses than it did last year, when it set aside tens of billions for defaults anticipated from the coronavirus pandemic. A year ago, the firm had added $6.8 billion to credit reserves.

“Overall, this was a great quarter for JPMorgan,” said Octavio Marenzi, CEO of consultancy Opimas. “It is now increasingly clear that the bank over-reserved, and that money is now flowing back into its earnings, concealing some of the weakness in consumer banking.”

JPMorgan shares dipped less than 1%.

Fixed income trading produced $5.8 billion in revenue, a 15% increase that exceeded analysts’ estimates by more than $800 million, on activity in securitized products and credit markets. Equities trading revenue surged 47% to $3.3 billion, a full $1 billion more than estimates, on “strong performance across products.”

JPMorgan, with the world’s biggest Wall Street bank by total revenue, was expected to benefit from robust investment banking fees driven by record issuance of special purpose acquisition companies, which saw more activity in the first quarter than all of 2020, itself a record year.

That came to pass: The firm said first-quarter investment banking revenue surged 222%, or a full $2 billion, to $2.9 billion, exceeding the estimate of $2.65 billion.

Most of the quarter’s reserve release came from the bank’s retail division: The firm said $3.5 billion was tied to the bank’s credit card borrowers, and another $625 million from home loan borrowers.

While that meant that the firm’s consumer and community banking division saw profit surge by $6.5 billion from a year earlier, to $6.73 billion, the bank said that card and mortgage revenue was impacted by lower balances as flush consumers pay down their debts.

In the release, CEO Jamie Dimon called loan demand “challenged,” but during a call with reporters Wednesday, Dimon added that the dynamic would ultimately be good for loan demand because consumers were in good shape.

Dimon struck an optimistic tone for the near-term economic future in the U.S., similar to comments he made this month in his annual shareholder letter.

“With all of the stimulus spending, potential infrastructure spending, continued quantitative easing, strong consumer and business balance sheets and euphoria around the potential end of the pandemic, we believe that the economy has the potential to have extremely robust, multi-year growth,” Dimon said in the release.

Analysts will also be curious about the pace of share repurchases the bank is expected to make. Last month, the Federal Reserve said banks that pass the industry’s 2021 stress test at mid-year will be allowed to resume higher levels of dividend payouts and buybacks starting June 30.

Shares of JPMorgan rose 21% so far this year, compared to the 25% advance of the KBW Bank Index.

After JPMorgan’s earnings statement, Goldman Sachs also released first-quarter results that crushed forecasts with record first-quarter net profits and sales due to strong performance in trading and investment banking.

Here are the JPMorgan numbers:

Earnings: $4.59 per share vs. $3.10 per share expected by analysts polled by Refinitiv.
Revenue: $33.12 billion vs. $30.52 billion expected.

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Correction: JPMorgan’s EPS figure comparable to estimates has been adjusted 9 cents higher to account for a one-time charitable contribution.

JPMorgan shares dipped less than 1%.

Source: https://www.cnbc.com/2021/04/14/jpmorgan-jpm-earnings-q1-2021.html

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Coinbase drops below debut price

Coinbase held its direct listing on the Nasdaq on Wednesday, luring public market investors who’ve been waiting to get into the cryptocurrency exchange.

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Coinbase shares opened at $381 on the Nasdaq Wednesday morning, giving the cryptocurrency exchange an initial market cap of $99.6 billion on a fully-diluted basis. Shares quickly shot up as high as $429, giving it a market cap of $112 billion on a fully-diluted basis, before dropping back below the debut price.

The price was still well above the reference price of $250 set on Tuesday night, but no shares were traded on public markets at that price.

Skirting the traditional IPO process, Coinbase listed its stock directly, allowing employees and existing shareholders to sell shares immediately at a market-based priced.

Excluding options and restricted stock units, Coinbase’s market cap was about $80 billion at the opening price. Including options and RSUs, it’s already one of the 85 most valuable U.S. companies.

Founded in 2012 as a way to simplify the purchase of bitcoin, Coinbase has emerged as the most popular crypto exchange in the U.S. and soared in value alongside digital currencies bitcoin and ethereum. The service now has 56 million users, up from 43 million at the end of 2020 and 32 million the year before that. In its last private financing round in 2018, investors valued Coinbase at $8 billion.

Coinbase is hitting the public market as a record amount of cash pours into cryptocurrencies and tech investors are thirsty for high-growth stories. Snowflake, Palantir, DoorDash, Airbnb and Roblox have all gone public in the past six months and have market capitalizations ranging from $45 billion to $106 billion.

Relative to those companies and others in the IPO pipeline, Coinbase’s recent growth is unparalleled. The company said last week in announcing preliminary first-quarter results that revenue in the period surged ninefold from a year ago to $1.8 billion, and net income climbed from $32 million to between $730 million and $800 million. The number of monthly transacting users (MTUs) climbed from 2.8 million three months earlier to 6.1 million.

For the full year of 2020, revenue more than doubled to $1.28 billion, and the company swung from a loss in 2019 to a profit of $322.3 million.

Most transactions on Coinbase involve the purchase of bitcoin or ethereum, which have been on a historic tear, climbing over 800% and 1,300%, respectively, in the past year. The company has said that its short-term performance will largely be determined by crypto prices.

Bryan Armstrong, Coinbase’s co-founder and CEO, owns 39.6 million shares. In August, Armstrong was granted a multibillion-dollar performance award tied to the company’s stock price, potentially letting him purchase up to 9.29 million options at $23.46 over 10 years.

WATCH: Coinbase public debut is historic moment for cryptocurrencies

Founded in 2012 as a way to simplify the purchase of bitcoin, Coinbase has emerged as the most popular crypto exchange in the U.S. and soared in value alongside digital currencies bitcoin and ethereum. The service now has 56 million users, up from 43 million at the end of 2020 and 32 million the year before that. In its last private financing round in 2018, investors valued Coinbase at $8 billion.

Source: https://www.cnbc.com/2021/04/14/coinbase-to-debut-on-nasdaq-in-direct-listing.html

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States rush to replace J&J vaccine appointments after FDA recommends pause

The FDA and CDC recommended a pause in the use of J&J’s vaccine after six women developed a rare blood clotting disorder.

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More than two dozen states took steps Tuesday to halt inoculations with Johnson & Johnson‘s coronavirus vaccine, shortly after the Food and Drug Administration recommended to pause its use after reports some women developed a rare blood clotting disorder.

The states, like the FDA and the Centers for Disease Control and Prevention, stressed that they were acting out of an abundance of caution, as more than 6.8 million doses of J&J’s vaccine have been injected and only six of the blood clotting cases have so far been reported.

J&J said in a statement that “no clear causal relationship” has been identified between the rare type of blood clots and the vaccine, adding it is working closely with regulators to assess the data.

New York Health Commissioner Dr. Howard Zucker said the state will “immediately” stop administering the single-dose J&J inoculation, and will use Pfizer‘s two-shot vaccine in its place for already scheduled appointments.

At least 25 other states, along with Washington, D.C., and Puerto Rico, also announced they are taking J&J’s vaccine doses out of their distribution plans.

Those precautions may not be in effect for long, however: Acting FDA Commissioner Janet Woodcock said Tuesday that she expected the pause to last only for a matter of days.

Dr. Anne Schuchat, principal deputy director of the CDC, noted Tuesday that people who got the J&J vaccine more than a month ago are at very low risk for developing the blood clots. All six reported cases occurred in women ages 18 to 48, whose symptoms developed within two weeks after they received the shot.

New Jersey’s Department of Health said that all vaccination sites in the state “have been told to cancel or put on hold appointments for the J&J vaccine until further notice.” The agency said it will work with those sites to replace J&J appointments with an alternative two-dose vaccine.

Virginia “will cease all Johnson & Johnson vaccines” while the FDA investigates the “extremely rare possible side effect,” according to a statement from the state’s vaccination coordinator, Dr. Danny Avula.

Connecticut’s Department of Public Health recommended all Covid vaccine providers stop using J&J’s vaccine “for the time being” while the FDA and the CDC complete their review.

Ohio Gov. Mike DeWine and top health officials in his state issued a similar advisory.

Massachusetts’ Department of Public Health notified all vaccine providers in the state to stop administering the J&J vaccine, “effective immediately.”

The other states are Colorado, Florida, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, North Carolina, Rhode Island, South Dakota, Texas, Utah and West Virginia.

Source: https://www.cnbc.com/2021/04/13/states-rush-to-replace-jj-vaccine-appointments-after-fda-recommends-pause.html

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