Kohl’s Corporation (NYSE:KSS) announced its financial results for the third quarter ended November 2, 2024. The company reported a decrease of 8.8% in net sales and a 9.3% drop in comparable sales compared to the same period in the previous year. The diluted earnings per share for the quarter were $0.20.
The third quarter results showed a mixed performance with some positive and negative changes. While gross margin as a percentage of net sales increased by 20 basis points to 39.1%, the selling, general & administrative expenses decreased 5.1% year-over-year to $1.3 billion. However, as a percentage of total revenue, SG&A expenses increased by 125 basis points year-over-year to 34.8%. Operating income for the quarter was $98 million, down from $157 million in the prior year, with a decrease of 120 basis points year-over-year. Net income for the quarter was $22 million, or $0.20 per diluted share, compared to $59 million, or $0.53 per diluted share in the prior year. Inventory decreased by 3% year-over-year to $4.1 billion, and operating cash flow was a use of $195 million.
For the nine months fiscal year 2024, net sales decreased by 6.1% year-over-year to $10.2 billion, with comparable sales down 6.4%. Gross margin as a percentage of net sales increased by 42 basis points to 39.4%, while SG&A expenses decreased 3.4% year-over-year to $3.8 billion. However, as a percentage of total revenue, SG&A expenses increased by 95 basis points year-over-year to 34.8%. Operating income for the nine months was $307 million compared to $418 million in the prior year, with a decrease of 79 basis points year-over-year. Net income for the nine months was $61 million, or $0.55 per diluted share, compared to $131 million, or $1.18 per diluted share in the prior year. Operating cash flow for the nine months was $52 million, and long-term debt was reduced by $113 million through the redemption of the remaining 9.50% notes due May 15, 2025.
Kohl’s updated its 2024 financial outlook, expecting a decrease of (7%) to (8%) in net sales and a decrease of (6%) to (7%) in comparable sales. The company also revised its operating margin to be in the range of 3.0% to 3.2% and its diluted EPS to be in the range of $1.20 to $1.50. The capital expenditures for the full year 2024 are estimated to be approximately $500 million.
The company also declared a quarterly cash dividend of $0.50 per share on November 13, 2024, payable on December 24, 2024.
As a response to the third quarter underperformance and expectations for a highly competitive holiday season, Kohl’s is taking aggressive action to reverse the sales declines. Additionally, the company announced a CEO transition process, with Chief Executive Officer Tom Kingsbury planning to step down effective January 15, 2025, and retail veteran Ashley Buchanan appointed as the new CEO and board member, also effective January 15, 2025. Following these announcements, the company's shares moved -17.6%, and are now trading at a price of $15.11. For more information, read the company's full 8-K submission here.
