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Wall St. rebounds as Kohl’s stock shows promise

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The stock market was on a rebound after three straight days of losses on Thursday as the Dow was up by 86 points and the S&P 500 and Nasdaq composite ending the day 1.06% and 1.77% higher, respectively. Microsoft, Facebook, and Alphabet all rose more than 1% while Netflix and Apple rallied more than 2% each.

Shares of Tesla and other speculative parts of the market bounced back as bitcoin prices recovered after a rollercoaster session on Wednesday. However, bitcoin briefly turned negative after the Treasury Department called for stricter compliance with the IRS.

China’s NetEase (NTES) surged 6.5%, leading the Nasdaq 100 as online retailer JD.com (JD) ran a close second, up nearly 5 %.

Adding to the gainers on Nasdaq, auto salvage leader Copart (CPRT) jumped 3.2% after squarely beating third-quarter revenue and earnings estimates. Chip designer Nvidia (NVDA)  traded  2.6% higher and so did Virgin Galactic Holdings, which popped 14%.

Kohl’s, the U.S. departmental retail store chains, which ones exclusive brands such as  Food Network, Jennifer Lopez, Marc Anthony, Rock & Republic, and Simply Vera Vera Wang reported strong fiscal first-quarter profit and sales on Thursday, surpassing expectations and increasing its full-year forecast.

Nevertheless, after suggesting a hit to its full-year profit margin due to high labor and shipping costs, its stock fell 12%.

The retailer reported earnings of USD1.05 per share, compared to the expected USD0.04 a share. Revenue surged 70%, amounting to USD3.89 billion, higher than analysts anticipated USD3.48 Billion.

Chief Executive Michelle Gass explained that momentum had accumulated amid the quarter, particularly in stores. Activewear experienced the biggest surge within the first quarter, reaching the mid-teens percentage from 2019, Gass said.

“The U.S. consumer is in a stronger position [and] spending has picked up, driven by stimulus, easing Covid-19 restrictions and people resuming more normalcy in their daily lives,” Gass said during an earnings call. “These factors are helping to reignite growth for the retail industry and we are positioned extremely well to capitalize on this acceleration.”

Given the strong bottom-line results and the increase in guidance, the sell-off is surprising. However, even with today’s decline, the stock is trading above where it started before the pandemic, indicating that the recovery has already been priced in, even though 2021 sales and adjusted EPS results are still expected to be below 2019 levels.

Kohl’s shares have increased over 48% year to date and have a current market cap of USD9.5 Billion.

Meanwhile, on the COVID front, the Department of Homeland Security stated that the U.S. borders with Canada and Mexico will remain restricted till June 21, with only trade and essential travel allowed until then. The restrictions had been set to expire on Friday.

The agency, in conjunction with its Canadian and Mexican counterparts, originally closed the borders to leisure travelers in March 2020, at the start of the pandemic. The restrictions have been extended on a monthly basis ever since.

 

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