Kohl’s Corporation (KSS) has significantly lowered its annual sales forecast, signaling ongoing struggles to attract shoppers amidst a pivotal CEO transition and an increasingly competitive holiday shopping environment. The company’s shares plummeted by 20% in early trading after it revealed third-quarter results that fell short of expectations.
Outgoing CEO Tom Kingsbury, in a candid post-earnings call, admitted that the company’s performance throughout 2024, particularly in the third quarter, was “frankly disappointing.” He highlighted the challenges Kohl’s faces with sales, which have continued to weaken. This new forecast paints a grim picture for Kohl’s, especially as the holiday season looms, suggesting a potential advantage for competitors like Walmart (WMT) and Amazon.com (AMZN), who might benefit from consumers’ heightened focus on bargains.
The retail landscape has seen aggressive discounting strategies this year, initiated earlier than usual due to the compressed shopping period between Thanksgiving and Christmas. Kohl’s, alongside other traditional department stores, has been trying to adapt by introducing new product lines and partnerships, such as with Babies “R” Us, to stay relevant. However, these efforts have come at the cost of reducing focus on its core apparel offerings, particularly in women’s fashion, which has adversely affected sales.
Kingsbury’s departure was announced just a day before these disappointing earnings were disclosed, with Ashley Buchanan, previously from Michaels Companies, set to take the helm in January. This leadership change occurs at a critical juncture for Kohl’s, which has seen its stock value drop by more than 47% year-to-date and 36% year-over-year.
Kohl’s experienced an 9.3% decline in comparable sales for the quarter ending November 2, marking its eleventh consecutive quarter of sales drops, well above the 5.1% decrease analysts had anticipated.
Financially, Kohl’s reported earnings of 20 cents per share, missing the consensus estimate of 28 cents. This compares to 53 cents per share in the prior year. Net income came in at $22 million from $59 million year-over-year. The company has now revised its full-year net sales expectation to a decline of 7% to 8%, from the previously projected 4% to 6% drop. This adjustment reflects not just the immediate challenges but also the broader shifts in consumer behavior and retail dynamics in a post-pandemic market.
Price Action: As of press time, KSS is changing hands at $15.06, down 17.86% intraday.
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