NEW YORK (AP) — Kohl's swung to a surprise fourth-quarter loss and sales slumped as the department store was forced to slash prices to get customers to buy clothing as inflation squeezed family budgets.
The retailer, based in Menomonee Falls, Wisconsin, also issued an annual profit outlook Wednesday that fell below Wall Street expectations, sending shares tumbling more than 7% in premarket trading.
A number of major retailers, Target, Walmart and Home Depot among them, have issued weaker financial outlooks for 2023 in a challenging economic environment for Americans. But Kohl's, which has been under pressure from activist shareholders to turn around its business, has been particularly hard hit because it focuses on clothing and it appeals to middle-income shoppers more vulnerable to rising prices.
Yet industry analysts also say Kohl's is to blame for its dismal performance.
Neil Saunders, managing director of GlobalData Retail, said that stores have grown messy and unappealing for shoppers.
“Over the holidays, shops should be inspiring and uplifting, enticing consumers into buying," said Saunders. ”Unfortunately, Kohl’s were the exact opposite with messy merchandise, bad lighting, and uncoordinated ranges all contributing to a dispiriting and confusing experience. Sadly, this problem has been getting worse over time and it is one of the first things the new executive team should address if it wants to stop the rot. ”
The disappointing performance underscores the big task that the company's new CEO Tom Kingsbury faces. Kingsbury, who was interim chief executive, was named its permanent CEO last month. The Kohl’s board member with more than 40 years experience in retail took over for Michelle Gass who was named president of Levi Strauss & Co. late last year.
On Tuesday, Kohl’s announced that 30-year retail veteran Dave Alves had been named Kohl’s president and chief operating officer, reporting to Kingsbury, effective April 1.
Kohl's reported a loss of $273 million, or $2.49 per share for the quarter ended Jan. 28. Industry analysts had projected per-share profits of 97 cents, according to a poll by FactSet.
Last year during the same period, the company earned $299 million, or $2.20 per share.
Sales fell a little more than 7% to $6.02 billion. Comparable-store sales — those from stores opened at least a year and online channels — slid 6.6%.
The company said that it expects net sales to be down anywhere from 2% to 4% for the year. It also expects profits to be $2.10 per share to $2.70 per share, excluding any non-recurring charges for the year. Analysts were expecting $3.17 per share.
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