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Kohl's Corp KSS

Morningstar Rating
$26.36 +0.20 (0.76%)
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Company Report

Kohl’s Is Implementing Needed Changes, but It Lacks a Competitive Edge

We assign a no-moat rating to Kohl's, which has lower sales now than it did 10 years ago despite widening its store base. We think its competitors, such as wide-moat Amazon and other online sellers, discount, and specialty retailers, will continue to siphon apparel sales from it and other department stores. Thus, while Kohl’s has responded to threats with increased e-commerce, improved merchandising, and an enhanced loyalty program, its operating margins have declined from the low-double digits over the past 10 years, and we do not expect they will rise above the midsingle digits over the next 10. Kohl’s has strengths, including its reputation for reasonable prices and more than 30 million loyalty members. Also, unlike some peers, it does not have large numbers of stores in struggling indoor malls. We think, however, that its store visitation is declining. Sales per square foot have declined since 2010 despite an increase in annual e-commerce from about $700 million in 2010 to around $5 billion at present. We believe Kohl’s large fleet of big-box stores is unnecessary in an increasingly fragmented market.

Price vs Fair Value

KSS is trading at a 687% premium.
Price
$26.15
Fair Value
$35.00
Uncertainty
Very High
1-Star Price
$48.90
5-Star Price
$51.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Kohl’s yearly digital sales increased significantly between 2015 and 2023 (to $4.8 billion from $2.7 billion), making it one of the largest online retailers in the US. Its large store base allows it to ship directly from stores and encourages buy online/pick up in stores.

Bears

Despite large investments, Kohl’s sales and operating margins have declined over the past decade. We anticipate below-market long-term sales growth of only 1%.

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News

Trading Information

Previous Close Price
$26.16
Day Range
$26.3626.53
52-Week Range
$17.6929.64
Bid/Ask
$26.15 / $26.31
Market Cap
$2.93 Bil
Volume/Avg
2,688 / 5.4 Mil

Key Statistics

Price/Earnings (Normalized)
8.98
Price/Sales
0.16
Dividend Yield (Trailing)
7.65%
Dividend Yield (Forward)
7.65%
Total Yield
8.20%

Company Profile

Kohl’s operates about 1,174 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 26% of its 2023 sales. The retailer, headquartered in Menomonee Falls, Wisconsin, opened its first department store in 1962.
Sector
Consumer Cyclical
Industry
Department Stores
Stock Style Box
Small Value
Total Number of Employees
96,000

Competitors

Valuation

Metric
KSS
M
URBN
Price/Earnings (Normalized)
8.985.8412.43
Price/Book Value
0.731.321.74
Price/Sales
0.160.240.73
Price/Cash Flow
2.372.995.37
Price/Earnings
KSS
M
URBN

Financial Strength

Metric
KSS
M
URBN
Quick Ratio
0.130.300.54
Current Ratio
1.311.371.29
Interest Coverage
2.081.6347.72
Quick Ratio
KSS
M
URBN

Profitability

Metric
KSS
M
URBN
Return on Assets (Normalized)
2.16%5.76%7.80%
Return on Equity (Normalized)
8.40%23.45%15.69%
Return on Invested Capital (Normalized)
5.26%11.22%9.67%
Return on Assets
KSS
M
URBN
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