It's Time to Stay Away From Kohl's
Over the last five years, Kohl's (NYSE: KSS) really hasn't delivered much in terms of top-line growth. The retailer has struggled to get back to the nearly $20 billion in revenue that it reported in 2020. Because of its sluggish growth, Kohl's has to attempt to squeeze earnings out of weaker revenue streams. Based on how long the company has been dealing with this, along with the retailer's forward guidance, I think it's time to steer clear of the stock, as it will likely continue to underperform the broader market.
The second quarter pretty much showcased the problem here. Comp sales were down 5.1%, with net sales decreasing 4.2% year over year to $3.5 billion. In contrast, Kohl's squeezed more out of sales, with an increase in net income to $66 million, versus $58 million a year ago. This led to $0.59 per diluted share, a 13.4% increase year over year.
Some might like the earnings growth, but I don't think it's sustainable long term if the company keeps reporting weak sales.
Source Fool.com
