Kohl's (KSS) falls on weak results, outlook; results 'awful' says analyst

Kohl’s (NYSE: KSS) shares are trading 6.5% lower in pre-market Wednesday after the company reported weaker-than-expected Q4 results and offered a soft full-year outlook.

Kohl’s reported adjusted loss per share of 2.49 while analysts were looking for a profit per share of $0.97. Revenue fell 7.2% year-over-year to $5.78 billion, again missing the $6.09B consensus.

Comparable sales were down 6.6%, a worse-than-expected decline compared to the 4.7% expected contraction. On a more positive note, inventories fell to $3.19B from $4.88B in the prior quarter.

“Kohl’s fourth quarter results reflect meaningful proactive measures we took to better position the business for 2023, as well as sales pressure driven by the ongoing persistent inflationary environment,” Tom Kingsbury, Kohl’s chief executive officer, stated.

“We are refining our strategy and re-establishing merchandise disciplines with a customer-centric focus across the organization.”

On the guidance front, the company expects full-year sales to decline 2-4% while adjusted EPS is seen at $2.40 (up or down 30 cents), missing the $3.20 consensus.

Vital Knowledge analyst Adam Crisafulli believes investors won’t be as positive on Kohl’s as for Target yesterday despite falling inventories.

“The inventory cut here is bullish, but there are too many secular questions hanging over the company (without a substantial food business to anchor traffic like WMT and TGT, it’s not clear how a big box retailer selling generic soft/hard goods can thrive),” the analyst wrote.

Goldman Sachs analyst Brooke Roach said the results are disappointing.

"We expect the stock to underperform peers today. Here, we note weaker than expected ongoing sales trends that are set to persist, a sharp decline in credit income achieved in the quarter, and a margin outlook that remains muted relative to history. While inventory balances appear to be sequentially healthier, on a Y/Y and days inventory basis they appear to remain elevated vs. the run rate sales trends of the business."

By Senad Karaahmetovic

You May Also Be Interested In

• RH (RH) Tops Q1 EPS by 12c
• Lennar Corp. (LEN) Misses Q2 EPS by 1c
• Driven Brands (DRVN) Tops Q4 EPS by 2c, Misses on Revenue; Offers FY26 Guidance