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Kohl's (KSS) Q2 Earnings in Focus: Everything You Should Know

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Kohl's Corporation KSS is likely to display year-over-year surge in the top and bottom lines, when it reports second-quarter fiscal 2021 numbers on Aug 19, before market open. The Zacks Consensus Estimate for revenues is pegged at $4,143 million, suggesting a jump of 21.6% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for earnings has moved 9.2% north over the past seven days to $1.19 per share, which indicates a considerable improvement from the loss of 25 cents reported in the prior-year period.

Kohls Corporation Price, Consensus and EPS Surprise
Kohls Corporation Price, Consensus and EPS Surprise

Key Factors to Note

Kohl’s is benefiting from its strategic framework that focuses on four key areas — driving top-line growth, expanding operating margin, implementing disciplined capital management, and undertaking an agile accountable and inclusive culture. Apart from these, Kohl’s is undertaking strategic efforts to solidify its omnichannel business, with the company’s investments yielding solid results. The impact of these upsides was reflected in the last reported quarter, wherein Kohl’s also benefited from favorable consumer spending. The company witnessed robust momentum, especially in its stores. Management raised its net sales, operating margin and earnings per share guidance for fiscal 2021 — which also bodes well for the quarter under review.

Apart from stores, Kohl’s has been benefiting from its growing digital business, especially amid the pandemic. We note that the company’s solid endeavors to boost mobile traffic have augmented the adoption of the Kohl app, making it a vital constituent of online sales. During the first quarter of fiscal 2021, the app accounted for one-third of online sales, led by double-digit user growth and enhanced conversion rates. To improve online offerings, Kohl’s has been expanding its e-commerce fulfillment centers alongside strengthening in-store pickups. The company’s Buy Online, Pickup In Store; Buy Online Ship to Store; curbside pickup and Amazon Returns initiatives are noteworthy. Other efforts to bolster digital sales include Smart Cart, Your Price and personalized search.

The company is also benefiting from the strength of its brands and prudent alliances. On its last earnings call, management highlighted that it is impressed with the brands’ performance, and expects to broaden the assortment and expand to 500 stores by this fall. These factors, together with the company’s impressive efforts to make the most of the back-to-school selling season, keep it well placed.

That said, management projects a sequential rise in SG&A expenses in the fiscal second quarter. This is likely to have been caused by higher investments in the Sephora partnership launch, as well as expenses related to the company’s store refresh activity.

What the Zacks Model Unveils

Our proven model predicts 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Kohl's currently flaunts a Zacks Rank #1 and has an Earnings ESP of +43.03%.

Other Stocks With Favorable Combinations

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

Burlington Stores BURL has an Earnings ESP of +17.37% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

DICK’S Sporting DKS has an Earnings ESP of +1.66% and carries a Zacks Rank #2.

Costco Wholesale COST has an Earnings ESP of +0.44% and holds a Zacks Rank #3.

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Kohls Corporation (KSS) : Free Stock Analysis Report

Costco Wholesale Corporation (COST) : Free Stock Analysis Report

DICKS Sporting Goods, Inc. (DKS) : Free Stock Analysis Report

Burlington Stores, Inc. (BURL) : Free Stock Analysis Report

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