NEW YORK (AP) — Kohl’s posted a surprise fourth-quarter loss and sales tumbled as the department store was forced to cut prices to entice customers to buy clothes as inflation weighed on family budgets .
The Menomonee Falls, Wis.-based retailer also posted a full-year earnings outlook Wednesday that fell below Wall Street expectations, sending shares down more than 7% in premarket trading.
A number of major retailers, including Target, Walmart and Home Depot, issued weaker 2023 financial outlooks amid a tough economic environment for Americans. But Kohl’s, which has come under pressure from activist shareholders to turn around its business, has been hit particularly hard as it focuses on clothing and attracts 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 stores have become messy and unappealing to shoppers.
“During the holidays, stores should be inspiring and uplifting, enticing consumers to buy,” Saunders said. “Unfortunately Kohl’s was the exact opposite with messy merchandise, poor lighting and uncoordinated ranges all contributing to a disheartening and confusing experience. Unfortunately this problem has worsened over time and is one some of the first things the new management team should fix if they want to stop the rot.”
The disappointing performance underscores the big task facing the company’s new CEO, Tom Kingsbury. Kingsbury, who was interim chief executive, was appointed permanent chief executive last month. The Kohl’s board member with more than 40 years of retail experience succeeded 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 president and chief operating officer of Kohl’s, reporting to Kingsbury, effective April 1.
Kohl’s posted a loss of $273 million, or $2.49 per share for the quarter ended Jan. 28. Industry analysts had forecast earnings per share of 97 cents, according to a survey by FactSet.
Last year, during the same period, the company earned $299 million, or $2.20 per share.
Sales fell just over 7% to $6.02 billion. Same-store sales — those at stores open for at least a year and through online channels — fell 6.6%.
The company said it expects net sales to decline 2% to 4% for the year. He also expects earnings to be between $2.10 per share and $2.70 per share, excluding one-time charges for the year. Analysts were expecting $3.17 per share.
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