Kohl’s Slashes Full-Year Outlook on Big Earnings Miss

Kohl’s Corp.’s stock is down double digits in Tuesday premarket trading on the heels of a disappointing third quarter and downward-adjusted full-year outlook.

Shares for the Menomonee Falls, Wis.-based retailer have dropped nearly 13% to $50.82 as of 8:30 a.m. ET.

For the period ended Nov. 2, it logged adjusted diluted earnings per share of 74 cents — well below Wall Street’s forecast of 86 cents. Profits dropped to $123 million, compared with $161 million the prior year. Same-store sales, which grew 2.5% in the same quarter last year, increased slightly by 0.4% this Q3, versus expected growth of 0.8%.

Although revenues shed 0.1% to $4.63, it topped analysts’ expectations of $4.4 billion. In a statement, CEO Michelle Gass remained positive on the business ahead of the crucial holiday shopping months.

“The quarter started off positive in August with another successful back-to-school season and ended strong in October,” she said. “We enter the holiday period with momentum and are strategically increasing our investments to take advantage of the unique opportunity to fuel growth and customer acquisition. We believe that investing in the short-term will support our strategies to drive profitable growth over the long term.”

However, Kohl’s slashed its full-year guidance. It now expects adjusted annual earnings per diluted share to be $4.75 to $4.95, compared with the prior range of $5.15 to $5.45.

In recent months, the struggling chain has made efforts to meet shifting consumer tastes, such as housing products from smaller, niche labels at 50 of its 1,200 stores through the Curated by Kohl’s program that rolled out in mid-October. It teamed up with Instagram and Facebook to find those emerging brands, building on partnerships with big-name corporations — including Amazon over the summer — to woo millennial and Generation Z shoppers.

Kohl’s has also beefed up e-commerce and expanded the activewear category, which tends to skew younger. Today, online shopping accounts for 20% of the retailer’s purchases, and the activewear category is one of its strongest, making up 20% of online sales.

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