Kohl’s Cashed, Macy’s On Parade & Nvidia Chips In
Kohl’s Cash Me Outside
From Target targeting inflation-shy shoppers to the DIY duopoly dueling for contractors’ cash, retail hasn’t had such a rip-roaring romp of a week since … well, you tell me. But little did we know all those reports were mere prep work for today’s strip mall slam.
The top card on this week’s Thursday Throwdown? Kohl’s (NYSE: KSS). No, seriously.
You don’t have to worry about Kohl’s ending up in the Great Stuff Picks portfolio … or even on the watchlist for future picks. Trust me. But after the retailer’s latest report … why, I can’t let the sucker go unmentioned today.
Earnings came in at $1.65 per share and absolutely destroyed estimates for just $0.64 per share. Revenue rose 15.6% to reach $4.6 billion, which also handily topped expectations for $4.27 billion with some wiggle room to spare.
Though, I want to know … how much is that in Kohl’s Cash? You know, the alternative currency that, surprisingly, no one has a problem with? I love paying with Kohl’s Cash and somehow getting more Kohl’s Cash back…
Anyway, Kohl’s quarter was so successful — how successful was it?! — that the company juiced up its earnings guidance for next quarter, now expecting to bring in between $7.10 and $7.30 per share. That’s way up from the company’s previous estimates of $5.80 to $6.10 per share.
Throw in half a billion dollars in share buybacks, and wham-o! You have the best quarter Kohl’s has reported since March — when KSS investors were last startled awake with a surprisingly decent quarter.
CEO Michelle Gass can hardly contain all that excitement, noting: “All of the pieces of our strategy are coming together, and we remain incredibly confident in the future of our business.” Incredibly. Confident. Are we still talking about Kohl’s?!
I love it when a plan comes together, and in Kohl’s case, that includes actually selling what consumers want to buy as the economy reopens … namely activewear and makeup. So, Kohl’s expanded its quantities of active and comfort clothing, and its 200 in-store Sephora shops are coming in clutch.
Whoa … stores within stores? That’s Kohl’s-ception.
Yeah, it’s kinda like … a department store or something!
And bringing a bestselling makeup chain like Sephora under its wing has been a boon for Kohl’s. A gaggle of suburbanites go into Kohl’s for a polo sweater and then get sucked into the makeup department … it’s the same tact that first made malls and department stores so appealing a century ago.
All that was missing was products people actually want to, you know, buy. And Kohl’s is quickly remedying that problem in its stores. You know what that means…
Malls are back! Malls are back!
Whoa there, let’s not jump to conclusions like the rest of the market. Next, you’re going to tell me that Macy’s (NYSE: M) reported good earnings…
While some investors seem to think everyone’s bopping around the food court like it’s 1999 again … I don’t get the same “mall revival” impression.
Kohl’s is the sultan of the suburban strip mall, but the company’s earnings might tell us more about the American consumer than Kohl’s itself.
Consumer spending isn’t letting up … not like I expected otherwise. But where people are spending their cash is changing — even compared to earlier in the pandemic.
Online shopping is great and all, but in a bizarre twist of fate, right now, it can be easier or cheaper to find what you’re shopping for in-person than on the web — especially when it comes to items like makeup and clothing that many people prefer to physically see and touch.
Plus, everyone’s a bargain hunter these days. Unlike what Jessie J. would have you believe, it is about the money, money, money … so don’t forget about the price tag.
Kohl’s at least gives you the illusion of sublime savings. I, for one, feel blessed to have the pleasure of spending $20 for a generic striped shirt that definitely never sold for the full $64 price Kohl’s claims. (Riddle me this: If everything is always on sale, is anything actually on sale?)
Kohl’s rightfully basked in the glow of a 15% rally today after its report dropped because — and I can’t believe I’m saying this about Kohl’s — it meets consumers’ needs right now. This glow-up phase may not last long for Kohl’s … after all, we humans are a notoriously fickle bunch, easily swayed by cheaper prices and convenience.
But if Kohl’s can keep up its partnership with Sephora and stays on top of consumers’ clothing demands like it did last quarter, the company might have a shot of not becoming an anchor-store has-been like the JCPenneys of the world.
And Now … For Something Completely Different!
A technology that my colleague Adam calls “Imperium” is about to spark the biggest investment mega trend in history … with one small Silicon Valley company at the center of it all.
According to experts, Imperium is set to go from virtually unknown … to having 2 billion users in the next four years, launching a stock market gravy train almost nobody sees coming.
It seems like someone’s been reading our rag here recently, as multiple analysts have now upgraded Boeing (NYSE: BA) stock in the past week, citing “clearer skies ahead” for this longtime Great Stuff Pick.
JPMorgan analyst Seth Seifman, for one, just upgraded Boeing from hold to buy and increased his price target from $260 to $275. (Don’t get too crazy there, Seth.)
According to Seifman, global air travel is on the mend now that COVID-19 vaccinations and booster shots have somewhat stemmed new infection rates. And barring any new COVID-19 variants emerging, travel should continue to pick up and eventually surpass pre-pandemic levels.
Not that all this positivity did much for Wall Street’s favorite whipping boy, mind you. Because heaven forbid BA investors be openly optimistic and buy Boeing stock. Seriously, this puppy’s not even up half a percent today … same as it ever was.
If you own shares of BA, here’s what you need to know: With airline travel picking up and deliveries reigniting for Boeing’s jets, this airliner will soar higher … eventually. It’ll just take some patience while we wait for other investors to sort out their feelings for this once highflier.
Guess what, Great Ones? In a wild turn of events, Macy’s did report knockout earnings this quarter… I mean, considering how many younger generations have forgotten department stores still exist.
Macy’s reported adjusted earnings per share of $1.23 versus the $0.31 expected. Revenue? That surprised as well: The mall retailer made $5.4 billion in the third quarter compared to the $5.2 billion analysts anticipated.
More importantly, Macy’s said it’s launching a brand-new digital marketplace in 2022 that will model the third-party selling capabilities of Amazon, Walmart, Target and others that already have a strong digital presence (you know, on that thing the young’uns call “the internet”).
Plus, Macy’s is teaming up with consulting firm AlixPartners to make sure the whole operation goes off without a hitch.
Considering I can’t even remember the last time Macy’s made headlines — and delivered positive news, no less! — this is a big win for investors who happen to have some Macy’s paper shares shoved in the bottom of a box somewhere.
Now for the hard part: Remembering whether that box is in the attic or the garage…
Speaking of chips…
I swear if you go on another food tirade…
Ahem. As I was saying, Ford (NYSE: F) plans to circumvent its ongoing chip shortage by partnering with New York-based semiconductor giant GlobalFounderies.
Not only will this help Ford’s ongoing supply chain issues that are hampering new vehicle production, but the more sophisticated chips that Ford’s designing with GlobalFounderies could give it a competitive edge against other automakers moving forward.
These higher-end chips would go into future Ford vehicles and should play well with its all-electric lineup, which requires more sophisticated semiconductor tech to begin with.
Some of you might remember that Ford’s already taken steps to gain more independence and flexibility with its Kentucky- and Tennessee-based battery plants. By bringing more production in-house, Ford can work quicker and more efficiently and even cut overall production costs … eventually.
But while Wall Street hailed Ford’s battery announcement back in September, it was less jazzed over the company’s semiconductor sentiment. In fact, the Street sent Ford shares 2% lower on the news.
I guess some investors have trouble understanding how a short-term crisis can be turned into a long-term opportunity … if you have the vision and billions of dollars to play with.
Oh, here I go again, writing about chip stocks on an empty stomach. Computer chips … chips … chips and dip … chips and queso … cheese. Hmm … delicious cheese.
Will you please stop?! Now you’re making me hungry!
Something, something, comradery! But I get your point, so back to the regularly scheduled programming we go. Wee!
For those of you who might’ve missed it, chipmaker extraordinaire and Great Stuff Pick Nvidia (Nasdaq: NVDA) reported third-quarter earnings yesterday that showed a 50% year-over-year revenue jump backed by the strong performance of Nvidia’s data center and gaming businesses.
The chipmaker brought in $2.9 billion in data center sales, up 55% from a year ago. Not to be outdone, Nvidia’s gaming business made $3.22 billion in revenue, a 42% increase year over year.
The Street was so impressed by Nvidia’s performance that it temporarily pushed NVDA shares 11% higher this morning, just scraping up against that $800 billion market cap. For a hot second, it looked like Nvidia might be the next company to cross the trillion-dollar threshold … and who’s to say that it still won’t?
I’m certainly not cashing in my Nvidia chips just yet — especially with the company’s new Omniverse platform already bringing AR and VR functionality to the much-anticipated metaverse. (If you still don’t know what the metaverse is, check this out.)
All told, Great Stuff readers who bought Nvidia shares back in May are already up about 95% — congrats to you lot! That’s not too shabby for six months of hodling, now is it?
And with that, I’ll hand it over to you, Great Ones. Did you buy into either Nvidia or Boeing when we first recommended them? When was the last time you shopped at Macy’s, or made a trip to the mall, for that matter? Anyone have Kohl’s cash that’s about to expire?
Barring all that, what else is on your mind this week? We’re less than a day away from tomorrow’s Reader Feedback, so make sure your voice is heard and write to us posthaste!
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