18 August 2020 by jbchevrel
Among CDX IG members, high-B retailers under-performed notably after the Q2 results of Kohl’s Corp (KSS). Its CDS is wider by +55bp on the day dragging along Nordstrom (JWN) +23bp and Macy’s (FD) +21bp. That largely contributed to CDX IG fair value (NAV) going wider 77.5 (+1). CDX is tighter -0.5 with e-minis at record high (3390). So we end up with skew more negative (-11). Back to Kohl's Corporation (KSS). KSS is an operator of department stores operating more than 1,000 stores and a website. KSS sells moderately-priced private label and national brand apparel, footwear, accessories, beauty and home products. There was some positives in this Q2 release, but the negatives were clearly stronger today. On the positive side of things, Q2 net loss was $0.25 per share while the Bloomberg consensus was much worse ($0.70 per share). On the negative side of things, KSS July sales performance slowed. The company made comments that COVID would continue to hurt its business in H22-2020. While Q2-2020 results were not as bad as feared, they still included firstly, a -23% drop in revenues. Today the KSS 5y widened +55bp to 328bp. It had started the COVID crisis at 110bp (dec24), had peaked at 625bp and had retraced to 270bp, before closing 328bp here.