Kohl's Has 'Competitive Advantages' Via Full-Family Offering, Says This Analyst

Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on Kohl's Corp KSS with a price target of $35.00.
The analyst said the company reported a Q2 EPS of $1.11, mostly in-line with the estimate of $1.12.
Related: Kohl's Shares Drop As Inflation Affects Q2 Earnings; Cuts FY22 Outlook Sharply
Telsey added that the 8.1% revenue decline matched the company's guidance provided on July 1 when it announced the conclusion of its strategic review process.
Gross margin declined 290 basis points to 39.6% in the fourth quarter, below the consensus estimate for a 140-bp decrease to 41.1%, due to increased freight costs, product cost inflation, and elevated promotions.
The analyst cited the company is seeing customers make fewer shopping trips, spend less per transaction, and shift towards value-oriented private brands.
Sephora at Kohl's continues to exceed expectations, driving incremental sales and attracting new customers in stores, the analyst added.
Telsey continues to see competitive advantages for Kohl's within the department store group through its value-oriented, full-family offering in a convenient off-mall footprint.
The analyst also said the promotional activity looks to weigh on margins in the back half of the year as the company moves through elevated inventory.
Price Action: KSS shares are trading lower by 6.86% at $31.62 on the last check Thursday.

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