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Kohl’s Q3 sales decline but EPS beats forecasts; dividend confirmed

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Kohl’s Corporation (NYSE:KSS) has reported a challenging third quarter with net sales falling to $4.05 billion, a decrease from last year’s performance. Despite this, the company saw an earnings per share (EPS) beat, recording $0.53 against analysts’ expectations of $0.39. The EPS figure, however, dropped from the previous year’s $0.82 per share. The retailer also noted a decrease in comparable store sales by 5.5% and a reduction in inventory levels by 13%, signaling effective cost management.

The company’s gross margin improved to 42.1%, reflecting strategic efforts that included enhancing gross margins and managing expenses amidst broader market challenges. Operating income for the quarter fell to $157 million, down from last year’s $200 million, while net income also saw a decline from $97 million to $59 million.

For the nine-month fiscal period ending in October, Kohl’s reported a net sales decrease of approximately 4.5% compared to the same period last year and a dip in operating income. Despite these challenges, the company updated its full-year EPS guidance to a range of $2.30-$2.70, up from earlier predictions of $2.10-$2.70.

Allocated capital expenditures are set towards the lower end of their forecasted range at $600-$650 million, focusing on expanding Sephora collaborations and refreshing store designs—initiatives that CEO Tom Kingsbury highlighted as gaining traction despite persistent same-store sales declines.

Operating cash flow remained steady at $151 million for the quarter, and the company has maintained its full-year operating margin projection at about 4%.

In terms of shareholder returns, Kohl’s reaffirmed its commitment to dividends, with a scheduled payment of $0.50 per share on December 20 for shareholders registered as of December 6.

With a market capitalization of approximately $2.75 billion and cash reserves totaling $190 million, Kohl’s is positioned for potential strategic expansions in the competitive retail industry landscape where it operates around 1,100 physical store locations.

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