Benzinga - by Shivani Kumaresan, Benzinga Staff Writer.
Telsey Advisory Group analyst Dana Telsey has analyzed the third-quarter FY23 earnings season for major retailers.
Kohl's Corp (NYSE: KSS)- Maintain Market Perform Rating, $29 Price Target
KSS reported third-quarter EPS of $0.53 (versus $0.82 last year), coming in ahead of the consensus expectation of $0.35. The beat was driven entirely by better-than-expected gross margin expansion.
The gross margin expansion was driven by lower freight costs and digital related shipping expenses, as well as the simplification of value strategies, writes the analyst.
In Q3, KSS saw total beauty sales growth of over 70%, with 30% plus comps from the Sephora shops opened in 2021 and 2022, indicating a sustained momentum from Sephora.
That said, the topline results disappointed in the quarter, and expenses, though well-maintained, deleveraged more-than-anticipated, reflecting continued investments in Sephora openings and wage pressure, notes the analyst.
The analyst says that the moderation in sales outlook and raising the bottom end of the EPS guidance speaks of the challenging macro-operating environment heading into the fourth quarter.
American Eagle Outfitters Inc (NYSE: AEO) - Maintain Market Perform, $19 Price Target
The analysts say that the modest earnings beat in Q3 was largely driven below the line as operational results were mixed with a softer gross margin partially offset by stronger sales and better expense control.
The company's inventory position continues to improve, down 4% exiting Q3 (versus down 7% last quarter), which should continue to support its gross margin expansion, notes the analyst.
Q3, according to the analyst, benefited from expense management to drive margin improvement, consistent with the past three quarters, reflecting continued efforts to improve operations.
Given AEO's exposure to the mid to-lower-income consumer, it could be a very competitive holiday season in a challenging consumer spending environment with clouded visibility near-term, writes the analyst.
Urban Outfitters Inc (NASDAQ: URBN) - Maintain Outperform Rating, $42 Price Target
URBN reported 3Q23 EPS of $0.88 versus $0.40 last year, topping the consensus estimate of $0.82.
The earnings beat was driven by better sales growth and gross margin expansion, says the analyst.
In October, URBN saw consumer demand slow slightly from August and September, and trends in November have tracked similarly to October, adds the analyst.
The UO brand continues to work to re-engage with its target demographic, leaving inventory at the brand elevated beyond optimal levels that can affect Q4 margins, writes the analyst.
Photo Via Company
Latest Ratings for KSS
| Mar 2022 | Telsey Advisory Group | Maintains | Market Perform | |
| Mar 2022 | Credit Suisse | Maintains | Neutral | |
| Feb 2022 | Gordon Haskett | Downgrades | Buy | Accumulate |
View the Latest Analyst Ratings
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.