Kohl’s NYSE: KSS, Target NYSE: TGT, Abercrombie & Fitch NYSE: ANF and AutoZone NYSE: AZO are among high profile retailers reporting earnings this week.
The retail sector has been on a roller coaster ride. Even before the pandemic, the situation looked dire for brick and mortar. Covid lockdowns seemed likely to be a death knell for the sector.
Despite job losses and stay-home orders, stimulus checks helped boost consumer spending.
Americans shopped for household goods, auto parts, and casual clothing. For some retailers, online channels were strong; others continue to rely more on walk-in traffic.
Kohls
Kohl’s NYSE: KSS said fourth-quarter earnings came in at $2.22 per share, a 12% year-over-year gain. That bottom-line number included $1.15 per share of incremental tax benefit, identified through corporate tax planning. Earnings beat analysts’ expectations of $1.04 per share. However, revenue was down 10%.
A partnership with Amazon (NASDAQ; AMZN) drew 2 million new customers to the stores. Amazon operates merchandise return kiosks inside Kohl’s stores.
Kohl’s is also teaming up with privately-held beauty retailer Sephora, which is opening 200 locations inside Kohl’s U.S. stores. Both partnerships are designed to attract younger customers.
The stock has been climbing out of a steep correction since October, notching five straight months of gains. It’s trading at its best levels since November 2019. Shares closed Wednesday at $57.61.
Target
Target NYSE: TGT reported earnings per share of $2.67 for the fourth quarter, up 58% from the year-earlier quarter. Revenue rose 21%, to $28.3 billion. Top- and bottom-line results beat analysts’ expectations.
Same-store sales climbed 20.5%, while online sales vaulted 118%. Target won praise from retail analysts for growing its online business during the pandemic. It also successfully promoted the curbside pickup service.
Target said it would spend $4 billion per year on various initiatives, including new store openings, a sign of optimism about continued growth in brick and mortar. It will also remodel stores, and open new warehouse hubs for its online business.
Shares slumped 6.77% on the capital expenditure news but rebounded slightly in the following session. The stock has been forming a flat-base consolidation since mid-January. It closed Wednesday at $173.61.
Abercrombie
Specialty retailers also fared well in the most recent quarter. Youth-oriented clothing chain
Abercrombie NYSE: ANF delivered earnings of $1.50 per share, up 15% from the year-earlier quarter, topping expectations of $1.20 per share.
Revenue fell 5% year-over-year, to $1.1 billion. The decline was a reflection of reduced store traffic during the pandemic. However, online sales partially offset that weakness, growing 34% year-over-year, to $639 million.
In the earnings call, CEO Fran Horowitz acknowledged continued uncertainty in the retail environment but said the firm plans to accelerate investment in digital technologies and marketing.
Chief financial officer Scott Lipesky added, “For the first quarter, we are planning as follows. Net sales to be up 30% to 40% from first-quarter 2020 sales of $485 million.”
Shares are up 1.02% for the week so far, to $27.65. The stock is trading 12% above its 10-week moving average.
Autozone
A totally different type of specialty retailer,
AutoZone (NYSE: AZO), also
posted strong quarterly results. In the second quarter, the automotive parts chain reported sales of $2.91 billion, an increase of 15.8% year-over-year. That exceeded Wall Street forecasts of $2.76 billion.
U.S. same-store sales were up 15.2%.
Net income grew 23% to $14.43 per share, outpacing analyst estimates of $12.90.
In the earnings call, CEO Bill Rhodes noted that the company typically does well in recessionary environments, as people maintain their existing vehicles, rather than purchasing new ones. However, Rhodes added that many uncertainties remain, including unknowns about permanent changes in consumer behaviors, vaccine distribution, and how Americans will spend upcoming stimulus checks.
AutoZone’s chart shows a flat base that began forming in January. So far, it’s corrected 14.3% from its January 12 high of $1297.82. If it corrects more than 15% from that high, it would no longer be considered a flat base, although another category of consolidation may also prove constructive.
The stock dropped slightly on Wednesday, ending the session at $1179.74.
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