Kohl’s (KSS) exceeded analysts’ earnings expectations in the first two quarters of fiscal 2017. However, the company missed analysts’ earnings expectations in fiscal 3Q17, which ended on October 28, 2017. Excluding one-time items, Kohl’s delivered adjusted EPS of $0.70 in fiscal 3Q17, lagging the consensus analyst estimate of $0.72.
Why 3Q earnings fell
Kohl’s 3Q17 adjusted EPS fell 12.5% on a year-over-year basis. This decline was a result of higher costs on lower-than-expected sales. The company’s bottom line was negatively impacted by higher costs, including higher shipping costs, and a 1.4% rise in selling, general, and administrative (or SG&A) expenses. Of the $15 million rise in SG&A expenses, $8 million was attributable to Hurricane Harvey and Hurricane Irma.
A 4.7% rise in depreciation and administrative expenses due to higher technology amortization also impacted Kohl’s earnings. Rival Macy’s (M) adjusted EPS surged 35.3% in fiscal 3Q17 as the company’s inventory controls helped in bringing down costs.
Following an improvement in the same-store sales in fiscal 3Q17, Kohl’s raised the low end of the full-year fiscal 2017 guidance. The company now expects its adjusted EPS in the $3.60 to $3.80 range in fiscal 2017. The company previously expected its fiscal 2017 EPS in the $3.50 to $3.80 range. Analysts expect the company’s fiscal adjusted EPS to come in at $3.78.
For fiscal 4Q17, analysts expect the company’s adjusted EPS to rise about 2.0% on a year-over-year basis to $1.47.