Kohl’s shares are sinking in premarket trading after the department store chain posted first-quarter earnings that fell well below Wall Street expectations.
The Menomonee Falls, Wis.-based company saw its stock tank 11% to $56 ahead of market open. It comes as Kohl’s reported adjusted earnings of 61 cents per share, missing consensus bets by 7 cents on revenues that were above forecasts but declined 2.9% to $4.09 billion. Same-store sales also slid 3.4%, versus estimates of a 0.2% drop.
“The year has started off slower than we’d like,” said CEO Michelle Gass. “We are actively addressing the opportunities that impacted our first quarter sales, and we have strong initiatives that will enhance our sales performance in the second half.”
Last month, Kohl’s announced the expansion of its deal with Amazon starting in July, which would allow customers to make returns from the e-tail giant to the company’s brick-and-mortar locations with no additional fees. It expects the partnership to positively impact sales, as more foot traffic could persuade shoppers to make purchases after they’ve returned their unwanted items.
Additionally, the company inked a deal with Planet Fitness in March, with 10 stores selected as part of the pilot program. (Kohl’s has been firming up plans to shrink its physical footprint by leasing extra space in stores to its retail partners, including grocery store chain Aldi.)
“We are incredibly excited about our nationwide rollout of the Amazon returns program as well as several important brand launches and program expansions,” Gass added. Yesterday, Kohl’s announced that it had signed a long-term deal with Fanatics to sell a selection of fan gear and other merchandise from the sports apparel retailer on its website starting this fall.
Kohl’s ended up slashing its outlook for the full year, now looking at adjusted annual earnings per diluted share in the range of $5.15 to $5.45, compared with its prior guidance of $5.80 to $6.15.
“Operationally, the team reacted appropriately throughout the quarter by managing expenses in line with our expectations,” Gass said. “While we are planning the year more conservatively, we continue to invest in our business and operate with a view on our long-term success.”
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