Kohl’s (KSS) is a well-known retailer that provides reasonably-priced merchandise such as clothing, shoes, accessories, and home and beauty goods through its physical locations and the Internet.
On November 18, Kohl’s announced strong third-quarter profits, with the company’s top and bottom lines continuing to grow. Revenues increased by 15.6% year-over-year, while adjusted earnings per share increased to $1.65 per share from $0.01 per share in the previous quarter.
Coming to share price performance, Kohl’s stock is up approximately 84% over the past year and 47% on a year-to-date basis.
Kohl’s Q3 Results Show Continued Growth
It’s amazing to see that Kohl’s showed record performance despite rising costs and inflation.
The outstanding results highlight the company’s ability to overcome inventory shortages and other supply-chain problems while still achieving impressive sales and margin improvements.
Following that, it’s worth noting that Kohl has been working hard to develop itself into a top destination for active and casual lifestyle items. Kohl provided an update to its investors on its recent agreement with Sephora, a renowned beauty product distributor, stating that about 200 new Sephora stores have been opened at Kohl’s locations.
Such partnerships with well-known brands, I believe, will help Kohl expand its goods selection and consumer base during this festive season.
To top it off, Kohl also raised its full-year revenue and profit outlook while increasing its share repurchase activity.
Kohl’s continuous focus on increasing its footprint in the retail industry through new partnerships and expanded offerings should help the company increase website traffic and grow even more.
Improved Website Traffic
Aside from the positive Q3 statistics, we saw that the number of unique visitors to Kohl’s website climbed by 3.7% from September to October. This period was also highlighted by growing stock prices, which rose by 3.1%.
These data were retrieved with the help of TipRanks’ new Website Traffic tool, which sources its data from Semrush (SEMR).
The growing number of visits to Kohl’s website reflects the company’s solid fundamentals and high demand for its items. Furthermore, the retailer’s positive prediction for full-year 2021 shows that it still has great potential for growth.
Analyst Weighs In
Guggenheim analyst Robert Drbul continues to be excited about the company’s Q3 earnings performance. He writes, “These results contributed to the highest 3Q operating margin in the past 9 years, and we remain optimistic that this heightened level of profitability is sustainable.”
Further, Kohl’s agreements with Amazon (AMZN) and Sephora, according to Drbul, are promising. He comments, “We look favorably on the potential of the Sephora rollout, which is proving to be a solid traffic driver, along with the traffic-driving Amazon Returns program, to aid in revenue recovery/growth with the ability to bring in new customers.”
Also, the analyst feels that the company’s many top-line efforts, such as “strong e-commerce and active growth, along with progress on the Outdoor category and resetting Women’s” should help it thrive.
As a result, Drbul maintained a Buy rating on Kohl stock and increased his price target to $75.00 from $70.00.
Wall Street Cautiously Optimistic
Turning to Wall Street, the analyst consensus is cautiously optimistic on Kohl’s, with a Moderate Buy consensus rating, based on 5 Buys, 5 Holds, and 2 Sell ratings. As for the price target, the average KSS price target of $69.08 implies 21% upside potential to current levels.
Furthermore, Kohl scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
Disclosure: At the time of publication, Shalu Saraf did not have a position in any of the securities mentioned in this article.
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