People walk near the entrance to Kohl’s department store on June 7, 2022 in Doral, Florida.
Joe Raedle | beautiful pictures
Kohl’s on Thursday again cut its financial forecast for the year, saying that its middle-income customers are particularly pressured by higher inflation, which has hurt apparel, shoe sales. slippers and other discretionary items.
The retailer says shoppers are making fewer trips to stores, spending less money per transaction and opting for more of Kohl’s less expensive private brands.
CEO Michelle Gass said in a statement that the company is adjusting its business plan and taking actions to reduce inventory and cut costs “to explain the softening demand outlook.” than.”
Shares of Kohl’s fell in pre-market trading, even after Kohl’s beat analysts who had lowered expectations for the company’s fiscal second-quarter profit and revenue, as investors focused more on future instructions.
Kohl’s now sees its net sales in fiscal 2022 fall 5% to 6%, compared with a previous 1% year-over-year increase. It also now projects adjusted earnings per share of $2.80 to $3.20, compared with the previous guidance of $6.45 to $6.85.
The dismal guide from Kohl’s follows the company in late June terminate negotiations to sell his business to the owner of The Vitamin Shoppe Franchise group, as the retail environment deteriorated during the bidding process. For months, Gass and her team faced increasing pressure from activist investors to pursue a sale of the company.
Kohl’s at the time cited that a difficult retail and financial environment had formed obstacles to reaching a “fully enforceable and acceptable agreement.”
The news from Kohl’s also came the same week that Walmart and Target both reiterated their full-year forecasts even as their profits came under pressure.
Walmart says they’ve seen more middle and higher income consumers visit their stores to look for discounted items, which helps its overall performance. However, Target’s earnings have been weighed down by an effort to process a stockpile at a steep drop ahead of the holiday season.
Kohl’s inventory levels in the latest quarter rose 48% from a year earlier due to lower sales. The company also says this increase comes from recent investments in the beauty sector for its partnership with Sephora and a strategy to pack and hold more merchandise.
Here’s how Kohl’s did in the fiscal second quarter ending July 30 compared to what analysts had predicted, based on Refinitiv estimates:
- Earnings per share: $1.11 adjusted versus $1.03 expected
- Revenue: $4.09 billion vs. $3.85 billion expected
Kohl’s net income for the three-month period ended July 30 plummeted to $143 million, or $1.11 per share, from $382 million, or $2.48 per share. , a year earlier.
Revenue fell 8.5% to $4.09 billion from $4.45 billion a year earlier.
Same-store sales, which track sales at Kohl’s stores open for at least 12 months, fell 7.7%.
“Although 2022 is more challenging than originally expected, Kohl’s remains a financially strong company,” Gass said.
The company said Thursday that it has entered into an expedited share buyback agreement to buy back about $500 million of its common stock.
Kohl’s also said it was based on a previously announced quarterly cash dividend of 50 cents a share, paid to shareholders on September 21.
Shares of Kohl are down about 31% so far this year, as of Wednesday’s market close.
