Kohl’s Corporation gains from cooperation with Amazon

Exchange: NYSE

Sector: Services

Industry: Department Stores

Entry strategy

Price: $77,5—$80,5

Stop-loss: under $72,65

Take profit: minimal aim — $89, then $100; long-term aims — $134 и $189

Investment horizon: 1 year and more

Company details

Kohl’s Corporation — an offline and online retailer from the USA. The stores and the website of the corporation offer clothes, shoes, accessories, cosmetics and household goods. As of February 3, 2018, the corporation has 1,158 department stores around the world.

Kohl’s Corporation was founded in 1962 and is headquartered in Menomonee Falls, Wisconsin.

The issuer’s capitalization is about $ 13.5 bn (group +Large).

Company financial performance

On August 21, 2018, Kohl’s Corporation reported for the second quarter of 2018. Published results were above the consensus forecast of analysts.

Adjusted earnings per share of $KSS showed an impressive growth of 41.9% y/y. The indicator was $1.76 against the expected $1.64 (see Table 1). The company’s revenue also increased in the second quarter stronger than expected — $4.57 billion (+ 10.4% y/y) vs. $ 4.27 billion.

Table 1. Quarterly financial results of Kohl’s Corporation from Q2 2017 to Q2 2018. Source: MarketWatch — Open original image

The corporation continues to grow due to the increase in sales revenue and increased efficiency and marginality of the business.

Revenue growth. One of the main factors of sales increasing above expectations is the synergistic effect of cooperation with Amazon. In October 2017, some Kohl’s stores began accepting the return of purchases from Amazon and selling the company’s goods for a smart home.

According to the management of Kohl’s Corporation, both sides are very satisfied with the results of nine months of the joint pilot project. In the future, the companies plan to strengthen and expand their cooperation through the Milwaukee chain of stores.

Increased efficiency. The key factor of the growth of earnings per share is the systematic work on inventory management and logistics in stores. Increasing the efficiency of inventory management is in the list of priority tasks stated the company’s development strategy. Financial reports show that the management of Kohl’s Corporation has succeeded in this direction.

Technical analysis (trading plan)

Graph 1. Technical analysis of Kohl’s Corporation ($KSS) stock. Source: TradingView — Open original image