People walk near the entrance of Kohl’s department store on June 7, 2022 in Doral, Florida.
Joe Raedle | Getty Images
Kohl’s cut its financial forecasts for the year again on Thursday, saying its middle-income customers have been particularly hard-pressed by higher inflation, which has dampened sales.
The retailer said shoppers are making fewer trips to stores, spending less money per transaction and opting more for Kohl’s less expensive private brands.
Chief Executive Michelle Gass said in a statement that the company is adjusting its business plans and taking actions to reduce inventory and cut expenses “to account for a softer demand outlook.”
Shares of Kohl’s fell in premarket trading, even after Kohl’s analysts cut expectations for its fiscal second-quarter profit and revenue, as investors were more focused on future guidance.
Kohl’s now sees its net sales in fiscal 2022 falling 5% to 6%, compared with an earlier range of plans of up to 1% from year-ago levels.
It also now expects adjusted earnings per share to be between $2.80 and $3.20, compared with previous guidance of $6.45 to $6.85.
The news from Kohl’s comes the same week that Walmart and Target reiterated their full-year forecasts, even as their profits are under pressure.
Walmart said it saw more upper- and middle-income consumers visiting its stores in search of discounted items, which helped its overall performance. Target’s earnings, however, were hurt by its efforts to clear excess merchandise with steep markdowns 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 said this increase stemmed from its recent investments in beauty for its partnership with Sephora and its strategy to package and stock more merchandise.
Here’s how Kohl’s did in its fiscal second quarter ended July 30 compared to what analysts were expecting, according to Refinitiv estimates:
Earnings per share: Adjusted $1.11 vs. $1.03 expected. Revenue: $4.09 billion vs. $3.85 billion expected
Kohl’s net income for the three months ended July 30 plunged to $143 million, or $1.11 a share, from $382 million, or $2.48 a share, a year before
Sales fell 8.5% to $4.09 billion from $4.45 billion a year earlier.
Same-store sales, which track revenue at Kohl’s stores open for at least 12 months, fell 7.7%.
“While 2022 has turned out to be more challenging than originally expected, Kohl’s remains a financially strong company,” Gass said.
The company said Thursday it has entered into an accelerated share repurchase agreement to buy about $500 million of its common stock.
Kohl’s also said it is maintaining its previously announced quarterly cash dividend of 50 cents per share, payable to shareholders on September 21.
Kohl’s shares are down about 31% so far this year, as of Wednesday’s market close.
This story is developing. Check back for updates.