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Here's What You Should Know Ahead of Kohl's (KSS) Q3 Earnings

Zacks Equity Research

Kohl's Corporation KSS is scheduled to release third-quarter fiscal 2019 results on Nov 19. This department store chain delivered a positive earnings surprise of nearly 2% in the last reported quarter.

The Zacks Consensus Estimate for third-quarter earnings has gone down 2.3% over the past 30 days to 84 cents per share. Moreover, this suggests a decrease of 14.3% from the year-ago period’s reported figure. The consensus mark for revenues is $4,644 million, indicating a marginal rise of 0.3% from the figure reported in the year-ago quarter.

Kohl's Corporation Price and EPS Surprise

Kohl's Corporation Price and EPS Surprise

Kohl's Corporation price-eps-surprise | Kohl's Corporation Quote

Key Factors to Note

High SG&A expenses have been weighing on Kohl’s operating income. The company has been incurring escalated marketing and IT expenses, as well as increased costs related to brand investments. Further, higher spending associated with payroll, technology and the Amazon Returns program has been a concern. Apart from this, tariffs on merchandise sourced from China are likely to have weighed on margins in the third quarter.

Nonetheless, Kohl’s efforts to drive store and e-commerce sales have been yielding results. The online business has been gaining from strong assortments and customer-centric investments. Further, solid endeavors to boost mobile traffic have augmented the adoption of the Kohl app, making it a vital constituent of online sales.  Additionally, Kohl’s has been strengthening its ties with retail giant Amazon to drive traffic. Incidentally, the company has been on track to expand the Amazon Returns program nationwide. According to this program, Kohl’s stores are accepting free, unpackaged and easy returns for customers of Amazon. Such store and digital efforts bode well for the top line.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Kohl's this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Kohl's carries a Zacks Rank #4 (Sell) and Earnings ESP of -11.11%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Dollar General DG has an Earnings ESP of +2.34% and Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lowe’s Companies LOW has an Earnings ESP of +1.62% and a Zacks Rank #2.

Foot Locker FL has an Earnings ESP of +0.64% and a Zacks Rank #3.

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