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Evaluating Kohl’s Top-Line Trends in 2018

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Dec. 18 2018, Updated 7:31 a.m. ET

The first nine months of 2018

Over the trailing 11 quarters, Kohl’s (KSS) has beaten top-line estimates eight times and missed them on three occasions. The company beat analysts’ top-line estimates marginally in the first quarter of 2018 and by 1.1% in the second quarter. In the third quarter, sales again marginally beat the projections.

On a year-over-year basis, for the third quarter, sales rose by a mere 0.9%. For the fourth quarter, analysts expect sales to fall 3% YoY to $6.57 million. Kohl’s hasn’t provided an outlook for the fourth quarter.

The last two quarters of 2018 are expected to be impacted negatively due to the shift in the company’s Family & Friends event in the first half of 2018 for Kohl’s. 

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What is driving sales for Kohl’s?

Kohl’s comps growth has been positive in the three quarters of 2018. The apparel business is doing well while the digital business and stores’ performance remains robust. Its digital channel comps rose in the mid-teens for the third quarter. For fiscal 2018, Kohl’s expects comps to increase in the band of 1%–2%. For fiscal 2017, Kohl’s delivered comps growth of 1.5%.

Kohl’s is focusing on its speed-to-market strategic initiatives for its proprietary brands. Moreover, the women’s apparel business is gaining traction due to improved assortment and a deliberate reduction in choices for customers. Kohl’s is confident that its PopSugar alliance will drive the women’s apparel sales. PopSugar is a noted digital women’s apparel brand with a great social media following.

A look at peers’ performance

Meanwhile, Macy’s (M) beat analysts’ top-line estimate in the first two quarters of fiscal 2018 but missed the same in one quarter. The company’s North Star strategic program including investments in digital sales platform has been driving its sales growth.

Nordstrom (JWN) beat analysts’ sales projections by 3.0% in the first quarter and topped the same by 2.8% in the second quarter. Again, in the third quarter, sales beat estimates by 1.5%. The top line is driven by higher digital sales and off-price sales.

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