Jefferies Details Kohl's Outlook, Says Company May Benefit From Easy Comparisons

Daniel Binder of Jefferies issued an outlook for Kohl's Corporation (NYSE: KSS) on Wednesday.

Binder notes that during the company's third quarter fiscal 2015 release, management stated that its new loyalty program and other initiatives will provide a 2 percent to 3 percent comp store gain. The analyst now believes that the company has indeed improved from recent quarters, but is only forecasting a 1 percent store sales gain for the fourth quarter.

“The piece that seems less certain to us is the value of the extra selling day, so we have not built as much into our forecast as management has,” Binder wrote. “A one percent gain would be below consensus, as many analysts have gotten in line with guidance, but it would still represent some improvement in the one, two and three year comp trend.”

Looking forward to fiscal 2016, Binder notes that cotton prices are lower by 30 percent from its peaks and will result in lower input costs for Kohl's. However, the reduced cost of raw materials may be offset from higher labor cost increases.

Binder also states that Kohl's will face easy comparisons through fiscal 2016 and that the company's plan to “engage and deepen” its relationship with customers should result in comp store sales gains over the coming quarters.

Shares are Buy rated with a $68 price target.