Retail

Earnings Previews: Kohl's, Macy's

After markets closed Monday, Roblox and Tencent Music reported results that were less than hoped for. In Tencent Music’s case, much less.

Home Depot, Sea and Walmart reported results Tuesday morning that were disappointing, encouraging and just okay, respectively.

We have already previewed four reports set for release before markets open on Wednesday: Analog Devices, Lowe’s, Target and TJX, along with four others set to report Wednesday after the closing bell: Bath & Body Works, Cisco, Nvidia and Robinhood.

Here is a look at the country’s two largest department store chains, both reporting before markets open Thursday morning.

Kohl’s

Department store operator Kohl’s Corp. (NYSE: KSS) trades about 11% higher than it did in January 2020. In April of last year, the stock was down nearly 80%. Since April 3, 2020, the stock is up 373%. Before the surge of infections due to the Delta variant of the coronavirus, Kohl’s stock was up about 58%, but as of Monday’s close, the stock had gained about 29% for the year to date.

Analyst sentiment on the stock is mixed. Of the 18 covering the stock, eight rate the shares a Buy and eight rate the stock a Hold. At a recent stock price of around $52.20, the upside potential based on a median price target of $65.50 is about 25.5%. At the high target of $75, the implied upside is about 44%.

Second-quarter revenue is forecast to rise sequentially by nearly 9% and year over year by 24.2% to $3.99 billion. Adjusted earnings per share (EPS) are forecast to rise by 20.4% sequentially to $1.26. In the same quarter last year, Kohl’s reported a loss per share of $0.26. For the 2022 fiscal year ending in January, Kohl’s is expected to report EPS of $4.33, compared with a full-year loss per share in 2021 of $1.21. Revenue is forecast to rise by 21.6% to $18.28 billion.

Kohl’s stock trades at 11.6 times expected 2022 EPS, 10.8 times estimated 2023 earnings and 10.5 times estimated 2024 earnings. The stock’s 52-week range is $18.28 to $64.80. Kohl’s pays an annual dividend of $1.00 (yield of 1.85%).

Macy’s

While Kohl’s has taken over as the largest department store by market cap, Macy’s Inc. (NYSE: M) trades about five times the share volume. Over the past 12 months, Macy’s and Kohl’s have followed essentially the same track, but Macy’s is up about 151% to Kohl’s 125%. For the year to date, Macy’s stock price has gained 60% to Kohl’s gain of about 29%.

Oddly, perhaps, analysts are much less optimistic about Macy’s stock price performance. The stock gets just one Buy rating, nine Hold ratings and seven Sell or Strong Sell ratings. Analysts appear to believe that what you see is all you are going to get here. At a price of around $18, the potential upside to the median price target of $19 is about 5.6%. At the high target of $27, the implied upside is 44%.

Macy’s is expected to post revenue of $5 billion for the quarter, up 6.3% sequentially and 40% higher year over year. Adjusted EPS are forecast at $0.17, down 57% sequentially and up from a loss per share of $0.81 in the year-ago quarter. For the full 2022 fiscal year, Macy’s is forecast to post EPS of $2.21, compared with a loss of the same size last year. Revenue is expected to total $22.21 billion, which would be 28% higher year over year.

Macy’s stock trades at 8.6 times expected 2022 EPS, 8.9 times estimated 2023 earnings and 8.2 times estimated 2024 earnings. The stock’s 52-week range is $5.57 to $22.30, and Macy’s has suspended its dividend.