Spotting Winners: Kohl's (NYSE:KSS) And Department Store Stocks In Q4

Let's dig into the relative performance of Kohl's (NYSE:KSS) and its peers as we unravel the now-completed Q4 department store earnings season.

Department stores emerged in the 19th century to provide customers with a wide variety of merchandise under one roof, offering a convenient and luxurious shopping experience. They played an important role in the history of American retail and urbanization, and prior to department stores, retailers tended to sell narrow specialty and niche items. But what was once new is now old, and department stores are somewhat considered a relic of the past. They are being attacked from multiple angles–stagnant foot traffic at malls where they’ve served as anchors; more nimble off-price and fast-fashion retailers; and e-commerce-first competitors not burdened by large physical footprints.

The 4 department store stocks we track reported a solid Q4; on average, revenues beat analyst consensus estimates by 1.7%. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and department store stocks have held roughly steady amidst all this, with share prices up 1.2% on average since the previous earnings results.

Kohl's (NYSE:KSS)

Founded as a corner grocery store in Milwaukee, Wisconsin, Kohl’s (NYSE:KSS) is a department store chain that sells clothing, cosmetics, electronics, and home goods.

Kohl's reported revenues of $5.96 billion, down 1% year on year, topping analyst expectations by 3.2%. It was a very strong quarter for the company, with an impressive beat of analysts' earnings estimates.

Tom Kingsbury, Kohl’s chief executive officer, said “2023 represented an important year for Kohl’s. We enhanced our store experience, expanded our partnership with Sephora, and invested in underpenetrated categories. We also simplified our value strategies and implemented new inventory management processes. The early success of our strategies is evident. Our store business had its best comparable sales performance since 2010, Sephora at Kohl’s continued to drive meaningful beauty sales growth, and we managed inventory down 10% at year end. I want to thank the broader Kohl’s team for driving significant change to reposition the company for future growth.”

The stock is down 14.5% since the results and currently trades at $23.24.

Is now the time to buy Kohl's? Access our full analysis of the earnings results here, it's free.

Best Q4: Dillard's (NYSE:DDS)

With stores located largely in the Southern and Western US, Dillard’s (NYSE:DDS) is a department store chain that sells clothing, cosmetics, accessories, and home goods.

Dillard's reported revenues of $1.50 billion, down 4.4% year on year, falling short of analyst expectations by 1%. It was a mixed quarter for the company: Same store sales missed fairly meaningfully, leading to a revenue miss. Gross margin was better than expectations and operating expenses were lower than expected though, allowing for operating profit and EPS to beat.

Dillard's had the weakest performance against analyst estimates and slowest revenue growth among its peers. The stock is up 31.8% since the results and currently trades at $406.98.

Is now the time to buy Dillard's? Access our full analysis of the earnings results here, it's free.

Weakest Q4: Nordstrom (NYSE:JWN)

Known for its exceptional customer service that features a ‘no questions asked’ return policy, Nordstrom (NYSE:JWN) is a high-end department store chain.

Nordstrom reported revenues of $4.42 billion, up 2.3% year on year, in line with analyst expectations. It was a slower quarter for the company, with underwhelming earnings guidance for the full year.

Nordstrom achieved the fastest revenue growth in the group. The stock is down 8.9% since the results and currently trades at $19.05.

Read our full analysis of Nordstrom's results here.

Macy's (NYSE:M)

With a storied history that began with its 1858 founding, Macy’s (NYSE:M) is a department store chain that sells clothing, cosmetics, accessories, and home goods.

Macy's reported revenues of $8.38 billion, down 2.4% year on year, surpassing analyst expectations by 3.5%. It was a mixed quarter for the company, with an impressive beat of analysts' revenue estimates. On the other hand, its full-year revenue forecast missed analysts' expectations.

Macy's delivered the biggest analyst estimates beat among its peers. The stock is down 3.8% since the results and currently trades at $18.58.

Read our full, actionable report on Macy's here, it's free.

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