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Macy's, Kohl's Q3 Results Top Estimates, While Children's Place Adj. EPS Missed

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Omni-channel fashion retailer Macy's, Inc. (M), department store chain Kohl's Corp. (KSS) and specialty apparel retailer The Children's Place, Inc. (PLCE) reported on Thursday that net profit for the third quarter approximately halved from last year, primarily on lower margins and higher expenses, apart from a single-digit percentage drop in net sales.

However, both adjusted earnings per share and net sales topped analysts' estimates at Macy's and Kohl's. At The Children's Place, adjusted earnings per share missed analysts' expectations, while quarterly net revenues topped them.

Macy's also raised earnings outlook, while The Children's Place slashed its adjusted earnings per share and net sales outlook. Kohl's withdrew its fiscal 2022 outlook.

In pre-market activity on the Nasdaq, Children's Place shares were plummeting $3.63 or 10.05 percent to trade at $32.50

Meanwhile, on the NYSE, Macy's shares are surging $1.45 or 7.36 percent to trade at $21.16, while Kohl's shares are down $0.98 or 3.29 percent to trade at $28.82.

Macy's reported third-quarter net income of $108 million or $0.39 per share, sharply lower than $239 million or $0.76 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $143 million or $0.52 per share, compared to $386 million or $1.23 per share in the year-ago quarter.

Net sales for the quarter declined 3.9 percent to $5.23 billion from $5.44 billion in the same quarter last year.

On average, analysts polled by Thomson Reuters expected the company to report earnings of $0.19 per share on net sales of $5.20 billion for the quarter. Analysts' estimates typically exclude special items.

Comparable sales were down 3.1 percent on an owned basis and down 2.7 percent on an owned-plus-licensed basis. Digital sales decreased 9 percent, and brick-and-motar sale edged down 1 percent.

Macy's comparable sales were down 4.4 percent on an owned basis and down 4.0 percent, on an owned-plus-licensed basis.

Bloomingdale's comparable sales on an owned basis were up 5.3 percent and on an owned-plus-licensed basis were up 4.1 percent.

Bluemercury comparable sales were up 14.0 percent on an owned and owned-plus-licensed basis

Gross margin was declined 230 basis points to 38.7 percent, due to promotional and permanent markdowns within the Macy's brand.

Looking ahead to fiscal 2022, the company raised its adjusted earnings guidance to a range of $4.07 to $4.27 per share from the prior forecast range of $4.00 to $4.20 per share, while reaffirming net sales outlook between $24.34 billion and $24.58 billion.

The Street is looking for earnings of $4.10 per share on net sales of $24.48 billion for the year.

Meanwhile, Kohl's reported net income for the third quarter of $97 million or $0.82 per share, sharply lower than $243 million or $1.65 per share in the prior-year quarter.

Total revenue for the quarter declined 7.0 percent to $4.28 billion from $4.60 billion in the same quarter last year.

Analysts expected earnings of $0.78 per share on revenues of $4.06 billion for the quarter.

Net sales were $4.05 billion, down 7.2 percent from last year's $4.37 billion. Comparable sales decreased 6.9 percent.

Kohl's said its Board has formed search committee to oversee the search for a new CEO while Tom Kingsbury has agreed to serve as Interim CEO during the transition period and the holiday season.

Kohl's noted that it not be providing guidance for the fourth quarter and also withdrawing its prior full-year 2022 guidance, given the recent volatility in business trends, the significant macroeconomic headwinds, along with the unexpected CEO transition.

Another retailer, The Children's Place reported that net income for the third quarter nearly halved to $42.86 million or $3.26 per share from $78.87 million or $5.30 per share in the prior-year quarter.

Excluding items, adjusted net income was $3.33 per share, compared to $5.43 per share last year. Analysts expected the company to report earnings of $3.73 per share for the quarter.

Net sales for the quarter declined 8.8 percent to $509.12 million from $558.23 million in the same quarter last year. Analysts expected revenue of $499.44 million for the quarter. Comparable retail sales decreased 10 percent for the quarter.

Looking ahead to the fourth quarter, the company expects adjusted earnings in a range of $0.50 to $0.75 per share on net sales between $460 million and $470 million, with a low-teens percent decrease in comparable retail sales. Analysts expect earnings of $2.33 per share on net sales of $480.08 million for the quarter.

For fiscal 2022, the company now projects adjusted earnings in a range of $4.05 to $4.30 per share on net sales between $1.713 billion and $1.723 billion, with a low-double digit decrease in comparable retail sales.

Previously, the company expected adjusted earnings of around $7.00 per share on net sales of approximately $1.725 billion, with a low double digit decrease in comparable retail sales.

The Street is looking for earnings of $6.46 per share on net sales of $1.72 billion for the year.

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