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20

August, 2018

Can Kohl’s Q2 Live Up To Wall Street’s High Expectations?

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Summary:

Kohl’s shoppers often post selfies with their receipt showing how much money they saved.

Kohl’s stock was hammered in 2016 and 2017 as the company consistently posted bad earnings reports that showed revenues decreasing on a year over year basis.  The stock was “dead money”, and it looked like Kohl’s was on its way to being yet another retail department store ghost town.

But the company turned things around late last year, and the stock has rallied by over 100% from lows to new all-time highs.  

Q2 Earnings Tomorrow Morning

Kohl’s is showing purchase intent mentions increasing year over year, and the early stages of Q3 indicate strong back-to-school sales.

When we look at LikeFolio’s Consumer Purchase Intent data for Kohl’s, which looks for social media mentions that indicate the user is shopping a the store or on the company website, we see a few striking things:

  • The Q4 2017 turnaround was predicted by Likefolio Data.  On the chart above, you can see that as the biggest bar on the graph, predicting a very solid quarter of growth prior to the stock’s big run.
  • Q2 2018 is showing an increase in Purchase Intent Mentions for Kohl’s compared to Q2 of 2017 (noted with red circles/arrow), which is in-line with analyst expectations.
  • The early results from Q3 are quite impressive, signaling that the company has had a successful start to the quarter during the all-important back to school season.

Expectations are very high

Wall Street obviously has very high expectations for Kohl’s Q2 earnings report.  Estimates call for the company to show year over year revenue growth of 7.3% and earnings of $1.65/share.

This growth expectation is reflected in the performance of the stock, which has more than doubled over the past year.

That Likefolio Purchase Intent data is up along with the stock price means that this is not a divergence opportunity like we saw with our incredibly profitable call on Nordstrom last week.

If anything, we would predict that the company will report revenues in-line with Wall St expectations, or a slight beat.  Our Q3 data suggests it is unlikely that the company will lower its guidance heading into the back half of the year.

Because the stock is near all-time highs, and our purchase intent data is not indicating a blowout quarter, Kohl’s simply doesn’t qualify as being worthy of an Opportunity Alert for our members.

In any event, the key to successful retail is to find their nitch & Kohl’s definitely seems to have done that over the past year. We will be keeping a close eye on the LikeFolio social data for this company, ready to alert members if a significant opportunity develops.

—  LikeFolio uses social media data to spot trends on Main Street before they become news on Wall Street.  We offer premium memberships as well as a free LikeFolio Letter.

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