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Kohl’s Q1 sales soars past estimates

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Yahoo Finance Canada Reporter Alicja Siekierska joins the Yahoo Finance Live panel with the latest on Kohl’s Q1 earnings and LBrands news.

Video Transcript

ZACK GUZMAN: Well, it's been a mixed bag in terms of the latest reports from America's largest retailers. We saw Target catch a nice pop, but the opposite playing out today for Kohl's and L brands. When we look in at Kohl's movement here today, shares off more than 10%, despite beating estimates there on the earnings front, but cautioning investors about margin pressures coming into play here in the back half of the year.

And for more on the retail roundup we got today, I want to bring in Yahoo Finance Canada reporter, Alicja Siekierska with the latest on the retail front. Alicja?

ALICJA SIEKIERSKA: Yeah, Zack. So what we're seeing here with Kohl's and L Brands, it seems to be following a trend that's happening in the wider retail sector through this earnings season. And that's despite the fact that these companies are beating analyst expectations when it comes to quarterly results, despite the fact that they are posting full-year guidance that's better than what analysts are expecting, their stocks are trading down.

As you can see with Kohl's there, that you had shown earlier, the stock was down today. It was down as much as 12%. And this despite the fact that sales surged in the quarter, as shoppers returned and net sales hit $3.6 billion, up from $2.1 billion last year. And this amounted to earnings per share of $0.09 per diluted share, which was compared to a loss last year of $3.52.

Now these results did surpass analyst expectations. But yet, Kohl's is trading down. So one thing to keep in mind here that they're lapping 2020, which was obviously a year that hit retailers very hard. And so you are seeing an improvement when you look at it on a year-over-year basis. But if you look at 2019, back when things were relatively normal, Kohl is still digging itself out of that hole, and sales are actually down 4% when you compare it to 2019.

ZACK GUZMAN: Yeah, the comps getting rather difficult when you think about moving past these easier ones we've had so far. And a similar kind of story, I guess, if you look at L Brands there, a lot less known guarantees when it comes to the way that they also joined-- and Home Depot, granted, these are very different brands we're talking about here-- but joining in in not providing full-year forecasts there, because of some of the unknowns. For them, though, maybe more tied into spinning off their Victoria's Secret brand.

ALICJA SIEKIERSKA: Yeah. I think that, in the second half of the year, is changing the picture a little bit for L Brands. But still, the results this quarter were stronger than what analysts had been expecting. Revenue was up slightly and earnings per share also up. So I think the question here is why are these stocks down, despite the fact that results were so positive? And you mentioned the comps going forward potentially a little bit more difficult.

And one thing perhaps to keep in mind is that these results may have already been priced in. Retail stocks have really been riding a recovery over the last six months, and it seems to have hit a bit of a lull. Wells Fargo analyst Ike Boruchow says investors are questioning how much juice is actually left in this rally. And then there's also the question of how strong the sales recovery is actually going to be going forward, or whether this is perhaps just a blip thanks to, fueled by stimulus check spending and pent-up demand as we exit the pandemic.

ZACK GUZMAN: Yeah. On the retail front, I mean, obviously there's some pull forward maybe for outfits out there as we reopen, but you can't imagine that's going to be lasting for much longer than a few quarters there. But Alicja Siekierska, Yahoo Finance Canada reporter, appreciate you hopping on here to break that down for us.