NEW YORK — Kohl’s Corp. cut its earnings forecast, as the department store chain joins a string of retailers stung with soaring inflation.
The cut in the company’s forecast, announced Thursday, came as it reported that its fiscal first-quarter financial results were below Wall Street expectations.
Shares were down nearly 6% in premarket trading.
Like many department stores, Kohl’s had struggled before the pandemic, but the health crisis wielded a big blow to sales. The company’s business was rebounding as customers were going out to social events and buying dressier clothes. But like other stores, it’s now grappling with supply chain issues and surging inflation that is causing pain to its business. Moreover, shoppers, facing with higher costs on everything from gas to milk, are scrutinizing their purchases.
It’s been a brutal earnings season for many retailers so far. Target reported Wednesday that its profit tumbled 52% compared with the same period last year in an environment of rising costs for things like fuel, and also a lightening quick return by consumers to more normalized spending. On Tuesday, Walmart’s shares tumbled about 17% for similar reasons after it posted quarterly results.
“The year has started out below our expectations,” said Kohl’s CEO Michelle Gass in a statement. She noted that following a strong start to the quarter with sales at stores up by low single digits, sales considerably weakened in April as it encountered surging inflation and lapped against last year’s stimulus plan.
The company said that it remains committed to its long-term strategy and said that its Sephora stores at Kohl’s delivered positive sales across the 200 location for the quarter. Gass expects business will improve in the second half as it benefits from the rollout of 400 additional Sephora stores, improved loyalty rewards and further investment in its stores
Gass also said that the company is reviewing multiple offers from interested parties looking to buy the business.
The company said the board is working with Goldman Sachs to conduct a broad process to explore strategic alternatives, which to date has included engaging with 25 parties. Further due diligence is ongoing, and the board has requested fully-financed final bids to be submitted in the coming weeks, the company said.
The Menomonee Falls, Wis.-based company said that it earned $14 million, or 11 cents per share.
The results missed Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of 75 cents per share.
The department store operator posted revenue of $3.72 billion in the period, which also did not meet Street forecasts. Three analysts surveyed by Zacks expected $3.85 billion. Sales fell from $3.88 billion in the year-ago period.
Kohl’s expects full-year earnings in the range of $6.45 to $6.85 per share. Analysts were expecting $7.09 per share. Sales for the year are now expected to be in at most up 1% as compared to the prior year.
Shares were down $2.46 to $40.67 in premarket trading today.