Kohl’s tumbles after the department store chain slashes its dividend, warns of weak sales ahead
The OG department store chain sounded the alarm on a pullback from lower-income consumers.
Kohl’s shares sank as much as 20% in early trading after the department store dropped less-than-stellar earnings for the Q4 holiday quarter. The bright spot: adjusted diluted earnings per share came in at $0.95, well above the $0.73 consensus estimate. Revenue for the quarter reached $5.17 billion, just shy of the expected $5.18 billion. Meanwhile, comparable (same-store) sales slid nearly 7%, also missing estimates. To shore up cash flow, the retailer also slashed its quarterly dividend to $0.12 from $0.50.
Like its peers, Kohl’s is feeling the squeeze as more shoppers pull back on nonessentials. While inflation has eased, management noted on the earnings call that those earning under $50,000 — and even those under $100,000 — are cutting back, with the potential for more pullback in the coming months. Kohl’s also highlighted the ongoing challenge of fine-tuning its coupon strategy, as it tries to strike the right balance between popular national brands and its own in-house labels. Despite these challenges, Kohl’s says the company’s supply chain is still a “well-oiled machine” and “isn’t over indexed in any particular country.”
Looking ahead, it’s not pretty. Kohl’s expects net sales to fall 5% to 7% this year, well below expectations. Earnings guidance is also bleak, with full-year diluted EPS forecast between $0.10 and $0.60 — a far cry from analyst projections of $1.22. The high end of its EPS guidance is actually even below what the least optimistic sell-side shop had penciled in. This continues the discouraging trend of retailers’ guidance for 2025 coming in shy of Wall Street’s forecasts.
Kohl’s is also bracing for weaker comparable sales and is set to close its 27th store.
