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Kohl's (KSS) Stock Gains 7% in 3 Months, Comps a Key Driver

Zacks Equity Research

Kohl's Corporation KSS is a preferred pick for investors, given its robust comparable store sales (comps) run. The company’s sales-drivers have helped it deliver positive comps for six straight quarters now, instilling confidence in investors. Markedly, this Zacks Rank #2 (Buy) stock has gained close to 7% in the past three months against the industry’s decline of 3.4%.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Let’s delve deeper.



Kohl’s Rides on Sturdy Comps Run

Kohl’s has been making robust efforts to draw shoppers and improve sales. Courtesy of these endeavors, comps registered an increase of 1% in the fourth quarter, largely buoyed by a solid holiday season performance. Comps benefitted from strength in both store and digital channels, reflecting the company’s robust marketing endeavors and product assortments.

Evidently, Kohl’s has experienced significant growth in its e-commerce business since the last few years. Digital sales witnessed double-digit increase during the fourth quarter on the back of favorable impacts from the company’s customer-centric investments. Well, mobile sales continued to be a significant driver, forming more than 50% of the company’s digital sales and about 70% of traffic improvement. We note that the company’s endeavors to boost mobile traffic have augmented the adoption of the Kohl app, making it a vital constituent of online sales. Moreover, in order to improve online offerings, the company has been expanding its e-commerce fulfillment centers.

Additionally, Kohl’s has established a strong brand portfolio with national brands such as Levi’s, Columbia Sportswear COLM, Reebok, Champion and KitchenAid, among others. Moreover, in the active category, brands like Adidas, Under Armour UAA and Nike NKE have particularly been doing well. Kohl’s also regularly introduces new brands to keep the inventory assortment fresh and drive customer traffic to its stores and website.

Apart from this, competitor store closures are also aiding Kohl’s sales growth and expected to remain a tailwind to market share growth. Further, we note that Kohl’s comps have been gaining from the  Greatness Agenda initiative, and focus on boosting traffic and enhancing operational excellence.

All said, management expects comps growth to be flat to up 2% in fiscal 2019. Further, management expects adjusted earnings per share of $5.80-$6.15 compared with $5.60 recorded in fiscal 2018. Clearly, Kohl’s is all set to sustain its strong momentum.

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