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Kohl's Corp - Stock Quote KSS

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Morningstar's Kohl's Corp Stock Analysis

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No-Moat Kohl’s Sales Process Fails as Its Sales Weaken, but We See a Contrarian Opportunity

David Swartz Equity Analyst

Analyst Note

| David Swartz |

No-moat Kohl’s reported a double dose of bad news. To start, its potential sale to Franchise Group fell through, and, due to slowing consumer spending, it also now expects second-quarter sales to decline by a high-single-digit percentage, below our negative 2% forecast. The $60 per share (later cut to $53) offer by Franchise Group to buy Kohl’s appeared unlikely to succeed from the start given Franchise Group’s small size and rising interest rates, and we do not expect any other bidders to emerge in the foreseeable future. Kohl’s share price plummeted below $30 for the first time since 2020 on the news and now trades at a roughly 50% discount to our $58 fair value estimate. We will revisit our expectations after the full second-quarter results are announced on Aug. 18, but we expect the negative impact of the sales miss on our valuation will be small.

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Key Statistics - KSS

Kohl's Corp's Company Profile

Business Description

Kohl’s operates 1,165 department stores in 49 states that sell moderately priced private-label and national brand clothing, shoes, accessories, cosmetics, and home furnishings. Most of these stores are in strip centers. Kohl’s also operates a large digital sales business. Women’s apparel is Kohl’s largest category, having generated 27% of its 2021 sales. The retailer, headquartered in Menomonee Falls, Wisconsin, opened its first department store in 1962.

N56 W17000 Ridgewood Drive
Menomonee Falls, WI, 53051
T +1 262 703-7000
Industry Department Stores
Most Recent Earnings Apr 30, 2022
Fiscal Year End Jan 28, 2023
Stock Type High Yield
Employees 99,000

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