Kohl's on Thursday reported fiscal fourth-quarter earnings per share of $1.58, which came in slightly above Wall Street expectations for $1.55. However, that relative beat came just three weeks after the retailer slashed its full-year earnings guidance.
Though Thursday's report provided few financial surprises, Kohl's initial 2016 guidance for earnings per share of $4.05 to $4.25 was in line with Wall Street forecasts, with the department store anticipating same-store sales to come in flat or up 1 percent during the year.
But analysts cautioned that the retailer, whose gross margin contracted during the quarter because of markdowns on cold-weather apparel, is still facing bloated inventory levels heading into 2016. Kohl's management said it expects this pressure to continue into the first quarter, as it tries to clear through the rest of this merchandise. However, it plans to drive its merchandise levels down throughout the year and in the longer term.
Still, Citi's Lejuez expressed doubts that Kohl's would be able to achieve its 2016 forecasts, pointing out that the company had missed its initial earnings per share guidance in three of the past four years.
"While 2016 guidance seems good enough on the surface ... [it] may prove optimistic," he said.
Overall, department stores' challenges continued in the fourth quarter. Kohl's and Nordstrom emerged as relative winners, with same-store sales increases of 0.4 percent and 1 percent, respectively.
Meanwhile, Macy's fourth-quarter comparable sales fell 4.3 percent, Dillard's dropped 2 percent and Sears' fell 7 percent. J.C. Penney is scheduled to report Friday.
CORRECTION: Retailer Finish Line has marked stores for closure. The retailer's name was misstated in an earlier version of this article.