Retail

Target or Kohl's: Who Will Have the Better Q4?

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Look for more retailers to share their fiscal fourth-quarter results this week. Leading off the charge are Target Corp. (NYSE: TGT) and Kohl’s Corp. (NYSE: KSS), both reporting their numbers before the markets open on Tuesday.

24/7 Wall St. has included consensus earnings estimates, the stock price and trading history, as well as some other highlights. We have looked at even more companies and retailers reporting this week in our weekly earnings preview.

It’s also worth noting that this holiday retail shopping season was, by most accounts, pretty good. However, the lion’s share of the increase in consumer retail spending went to online sales. Sales at brick-and-mortar stores rose 1.2% during the 2019 holiday season, according to Mastercard Spending Pulse data. E-commerce sales rose by 19%, and total sales rose 3.4%.

As for Target results, analysts anticipate $1.65 in earnings per share (EPS) and $23.49 billion in revenue. The same period of last year reportedly had $1.53 in EPS and $22.98 billion in revenue.

The company previously announced that comparable sales for the November-December holiday shopping season rose by just 1.4% and that, based on that number, fourth-quarter comparable sales were expected to rise by 1.4%.

Holiday season sales of electronics gear fell by more than 6%, while toy sales were “approximately flat” with sales during the 2018 holiday season.

The company said that comparable sales growth was driven by higher foot traffic and a “small increase” in the average ticket. Comparable digital sales rose by 19%, driven primarily by the company’s same-day fulfillment services, which together grew more than 50% from the same period last year.

Excluding Monday’s move, Target stock had underperformed the broad markets with a decline of nearly 20% year to date. In the past 52 weeks, the stock was actually up 42%.

The Kohl’s consensus forecast calls for $1.88 in EPS and $6.52 billion in revenue. In the fiscal fourth quarter of last year, the retailer said it had $2.24 in EPS and $6.54 billion in revenue.

The company previously reported that November and December same-store sales dipped by 0.2% year over year. Kohl’s CEO Michelle Gass commented that the company is “managing the business with discipline” and that Kohl’s will “deliver on its earnings guidance for the full year.” However, the guidance now calls for full-year profits per share at the low end of the $4.75 to $4.95 range. This seems to be a symptom of Amazon’s growing e-commerce influence.

Gass also teased the company’s March 16 Investor Day: “As we look ahead, we are committed to driving innovation and bringing new experiences to both our existing and new customers.  We look forward to sharing additional details on our key growth initiatives at our upcoming investor day.”

Those are not exactly soul-stirring words to investors because they’re too hard to interpret. Closing stores and firing employees, those are easy to understand and generally produce the results (higher returns) that investors seek.

Before Monday’s move, Kohl’s stock had underperformed the broad markets, with its share price down about 23% year to date. In the past 52 weeks, the stock was down closer to 42%.

Target stock traded relatively flat at $103.27 Monday morning, in a 52-week range of $70.03 to $130.24. The consensus price target is $134.59.

Kohl’s stock was last seen down about 3% to $37.85. The 52-week range is $37.11 to $75.91, and the consensus analyst target is $47.31.

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