Kohl’s Plunges Most on Record After Huge Miss, Guidance Cut

Kohl’s Plunges Most on Record After Huge Miss, Guidance Cut

(Bloomberg) — The choosy US retail customer still doesn’t want what Kohl’s Corp. is trying to sell.

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The midmarket department-store chain slashed its guidance for the full year after reporting first-quarter results that wildly missed on just about every metric. Comparable sales, which measure the performance of stores open at least one year, fell 4.4% in the quarter ended May 4 — the ninth consecutive decline. Analysts had expected a 1.7% drop.

Although Kohl’s offered deep discounts in the period, the company said sales of clearance items actually declined, leading to the miss on comparable sales. On the company’s website Thursday, it was hawking sales of as much as 85% off.

The stock tumbled as much as 25% in New York trading, the most on record. The shares had declined 5% this year through Wednesday, compared with a 9.7% gain for the Russell 1000 Index.

The Menomonee Falls, Wisconsin-based retail chain has been introducing tie-ups with other brands to bring customers in, most notably with cosmetics chain Sephora. Though Kohl’s cited strong growth in Sephora traffic, it doesn’t look to be translating into many sales outside the store-in-store locations.

The company, which brought on board member Tom Kingsbury as chief executive officer in February 2023 after a lengthy search, said the quarter’s results “did not meet our expectations and are not reflective of the direction we are heading with our strategic initiatives.”

Picky Consumers

Thursday’s retail results reinforce that inflation-weary consumers are seeking value, and being picky about what that means to them.

Foot Locker Inc. soared as much as 27%, the most since November 2017, after saying profit far exceeded analysts’ estimates. Still, CEO Mary Dillon struck a cautious note in an interview.

“There’s still pressure on the consumer for us — exposure to inflation, interest rates and reduced savings,” Dillon said. “But it’s discretionary for a reason. They decide where to spend it.”

Dollar General Inc., in the midst of turnaround efforts under two-time CEO Todd Vasos, said Thursday that gains in traffic and market share drove sales growth, though shoppers are spending less per transaction on average. Consumable products are growing, but more discretionary items such as apparel, seasonal and home products are declining.

Best Buy Co., the last big US electronics chain, is all about discretionary items — and comparable sales slumped 6.1% in its most recent quarter, missing estimates. Still, the company outperformed on profit thanks to membership and service offerings.

Discount chain Burlington Stores Inc. surged as much as 16% in premarket trading after reporting comparable sales and earnings that topped estimates. The company also raised its full-year guidance. “The quarter got off to a slow start in February, likely due to disruptive weather and delayed tax refunds, but then our sales trend picked up,” CEO Michael O’Sullivan said in a statement.

–With assistance from Jaewon Kang and Kim Bhasin.

(Updates with shares in fourth paragraph, Foot Locker in eighth paragraph.)

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