Kohl's (KSS) stock is down more than 25% midday Thursday after the department store chain failed to meet revenue and earnings expectations for its fiscal first quarter and slashed its outlook for the full year. If these losses hold through the close, it will be the retail stock's worst day ever, according to Dow Jones Market Data.
In the 13-week period ended May 4, Kohl's reported net sales of $3.2 billion, a decrease of 5.3% year-over-year, as its comparable-store sales fell 4.4%. On the bottom line, KSS swung to a per-share loss of 24 cents compared to earnings of 13 cents per share in the year-ago period.
"Our first-quarter results did not meet our expectations and are not reflective of the direction we are heading with our strategic initiatives," CEO Tom Kingsbury said in a statement. "Regular price sales increased year-over-year, with early success in underpenetrated categories, positive trends in our Women's business, and continued strong growth in Sephora."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
However, Kingsbury added that lower clearance sales this year vs last created a big drag on same-store sales.
The results came up well short of analysts' expectations. According to CNBC, Wall Street was anticipating revenue of $3.3 billion and earnings of 4 cents per share.
After the weak start to the year, Kohl's lowered its full-year outlook. It now expects sales to decrease 2% to 4% and earnings to arrive in the range of $1.25 to $1.85 per share. It had previously guided for sales to land between a decrease of 1% to an increase of 1% and EPS to fall between $2.10 to $2.70.
"We are approaching our financial outlook for the year more conservatively given the first-quarter underperformance and the ongoing uncertainty in the consumer environment," Kingsbury said.
Is Kohl's stock a buy, sell or hold?
Heading into today's trading, the consumer discretionary stock was down 5% for the year to date. As such most analysts were on the sidelines.
While the average analyst price target of $26.79 represents implied upside of more than 35% to current levels, according to S&P Global Market Intelligence, the consensus recommendation is a Hold.
UBS Global Research analyst Jay Sole, however, is decidedly bearish toward Kohl's stock. The analyst maintains a Sell rating on the shares and a $15 price target, representing a discount of more than 24% to current levels.
"Kohl's effort doesn't look like it is generating much incremental sales growth," Sole wrote in a May 20 note to clients. "Thus, we think KSS will likely have given up some of its long-term profit margin potential for little in return since price decreases are very difficult to reverse."
The analyst also believes that Kohl's lost big market share at the start of its fiscal year, which "gives us increased conviction in our Sell rating."
Related Content
-
The Most Tax-Friendly State for Retirement in 2025: Here It IsRetirement Tax How do you retire ‘tax-free’? This state doesn’t tax retirement income, has a low median property tax bill, and even offers savings on gas. Are you ready for a move?
-
Plan for Higher Health Care Costs in 2026: Projected Medicare Part B and Part D PremiumsIn 2026, Medicare participants will pay more for their health care. Part B costs are expected to rise more than 10%. Here's what you can do.
-
Avoid Medicare's 'Shadow Tax' With This Financial Expert's IRMAA-Busting TipsYou're cruising along in retirement, and then bam: Your Medicare premiums soar because your income crossed the limit. Take a breath. There could be a solution.
-
Grilling Season and ETFs: There's More Than One Way to Cook Up a PortfolioExchange-traded funds come in a multitude of 'flavors' these days, from passive to active to factor-based. Their flexibility is what makes them so delicious.
-
You Don't Want It, But You Should Plan for It Anyway: An Expert Guide to Long-Term CarePlanning for long-term care is crucial to protect your independence, family and financial stability against unexpected health events and rising care costs not covered by standard insurance.
-
Japan Tariffs: 5 Things That Might Get More Expensive for YouPresident Donald Trump's trade agreement with Japan features a 15% reciprocal tariff for all imported products, which could impact the prices of these items when you go shopping.
-
Five Questions to Help Ensure a Happy, Secure RetirementYou need to drill down to what you really want out of retirement. Then you can get down to the business of crafting a financial plan to make it happen.
-
I'm a Financial Adviser: This Is How You Can Save for Big Goals Even if You Feel Like You're Barely Getting ByLearning good financial habits — building an emergency fund, paying down debt, saving consistently — gives you flexibility, options and a path to security.
-
How to Buy an Annuity Online (Without Regret)You should never be rushed into buying an annuity. But now that they can be sold quickly and easily online, you need to be more alert than ever to pushy salesmanship. Here are four signs you're working online with a professional.
-
Dow Dives 542 Points on Soft Jobs Data: Stock Market TodayThe last day of a busy week ends with the first greater-than-1% move in either direction in more than a month.
