Before the opening bell on Tuesday, two retailers released earnings results for the fourth quarter of 2018.
Target Corp. TGT posted non-GAAP earnings of $1.53 per share, beating forecasts by 1 cent.
Revenue of $22.98 billion, which was flat from the prior-year quarter, beat expectations by $70 million.
Target also recorded a 5.3% increase in total comparable sales. Same-store sales gained 2.9% and digital sales contributed 2.4 percentage points.
Year over year, the retailer recorded a 1.5% decline in the gross margin to 25.7% of total revenues and a 1.2% decline in the operating income margin to 4.91% of total revenues.
For full-year 2018, Target posted a 3.7% increase in total revenues to $74.4 billion, a 2.7% decline in operating income to $4.2 billion and an 0.8% rise in GAAP earnings to $2.94 billion, or $5.50 per share. Non-GAAP earnings were $5.39 per share.
Looking ahead to the first quarter, Target guided for non-GAAP earnings ranging between $1.32 and $1.52 per share versus a consensus of $1.43. The company projects earnings for fiscal 2019 will range from $5.75 to $6.05 per share versus a consensus of $5.61.
Shares of Target were trading around $72.7 at close on Monday for a market capitalization of $37.92 billion. The stock increased 1% over the 52 weeks through March 4 and is now above the 50-day simple moving average line, in line with the 100-day line and below the 200-day line. The closing price on Monday was 21% off the 52-week low of $60.15 and 24.3% below the 52-week high of $90.39.
Wall Street issued a hold recommendation rating with an average target price of $81.05 per share of Target.
The company has paid dividends since 1983. Based on the closing price on Monday and a quarterly dividend of 64 cents per common share, the forward dividend yield is 3.51% versus an industry median of 2.22%.
For the final quarter of 2018, Kohl's Corp. KSS posted non-GAAP earnings of $2.24 per share, beating consensus by 6 cents, and GAAP earnings of $1.67 per share, missing consensus by 50 cents.
Revenue declined 3.4% year over year to $6.82 billion, but beat expectations by $140 million.
During the quarter, comparable store sales rose 1% year over year, the gross margin increased 1 basis point to 33.5% and the operating income margin fell 1.7 percentage points to 6.7%. In addition, Kohl's reported that selling, general and administrative expenses decreased 1.9% to $1.7 billion and merchandise inventory fell 1.9% to $3.48 billion. The company operated 1,159 stores in the fourth quarter, up from 1,150 stores in the prior-year quarter.
For full fiscal 2018, Kohl's recorded a 0.7% increase in total revenue to $20.2 billion, a 7% decline in net income to $801 million, or $4.84 per diluted share, and a 32% increase in non-GAAP net income to $927 million, or $5.6 per diluted share. The gross margin was 36.4% of total revenues in 2018, 32 basis points higher than in 2017.
For full fiscal 2019, Kohl's is guiding for same-store sales growth between 0% and 2%, the gross margin rate to increase 10 basis points, the tax rate to be between 24% and 25% and earnings of $5.80 to $6.15 per diluted share.
In addition, the company plans to implement a share repurchase program totaling $400 million to $500 million.
Shares of Kohl's were trading around $66.5 at close on Monday for a market capitalization of $10.98 billion. The stock decreased 1% over the 52 weeks through March 4 and is now below the 200 and 100-day simple moving average lines and almost on par with the 50-day line. The closing price on Monday was 14.9% above the 52-week low of $57.89 and 25.2% below the 52-week high of $83.28.
Wall Street issued an overweight recommendation rating on shares of Kohl's with an average target price is $73.88 per share.
The company has paid dividends since 2011. Shareholders of record as of March 20 will receive a quarterly dividend of 67 cents per share on April 3, reflecting a 10% increase from the previous payment. The ex-dividend date is March 19. Based on the quarterly dividend of 67 cents and closing share price on Monday, the forward dividend yield is 3.67% versus an industry median of 2.29%.
Disclosure: I have no positions in any securities mentioned.
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