Kohl’s Shares Fall Over 20% Following Significant Earnings Drop

On Thursday, after Kohl’s reported an unexpected loss per share below Wall Street’s predictions, the company’s shares dropped by over 20%. This downturn positions the stock en route to its largest single-day percentage drop in history.

Kohl’s CEO, Tom Kingsbury, attributed the slower sales to challenging comparisons. He said that the department store had a higher level of clearance in the previous year as part of efforts to streamline inventory and initiate its turnaround strategy.

He also explained that sales trends were robust at the start of the quarter in the first two months of 2024, but they weakened in the last five weeks of the period as customers took a step back from spending on buying seasonal merchandise like clothing for spring because of bad weather. He said, “Fortunately, we see it coming back as the weather improves.”

Kohl’s disappointing financial performance has left investors concerned about the effectiveness of the company’s strategy to turn things around. Under the leadership of Kingsbury, the former head of Burlington Stores, Kohl’s has made attempts to draw in customers by introducing new product lines such as gift products, home decor, and pet supplies. Additionally, the retailer has ramped up the number of Sephora shop-in-shops within its stores.

However, these attempts have not yet proven to shift its position. For the first quarter, the company reported a net loss of $27 million, which is a loss of 24 cents per share. It was in a stronger position last year in the same period with profits of $14 million, which is 13 cents per share.

Net sales took a 5.3% dip to $3.18 billion down from the previous year.

According to a survey of analysts by LSEG, Wall Street’s predictions for Kohl’s fiscal first quarter were considerably off, with loss per share coming in at 24 cents compared to a forecasted profit of 4 cents and with revenue coming in at $3.18 billion compared to a forecasted $3.34 billion.

On Thursday, Kohl’s reduced its 2024 guidance. Now, the company expects full-year net sales to drop between 2% and 4% compared to an expected 0.2% increase.