Kohl's Cuts Back 2022 Sales, Profit Estimates

Kohl’s late last week slashed its sales and profit expectations for the year, a result of its stepped-up price cutting to shed unwanted merchandise, Anne D’Innocenzio and Michelle Chapman reported for the Associated Press (AP).

Photo Insert: ales at Kohl’s Corp. fell to $4.09 billion in the second quarter compared with $4.45 billion during the same stretch last year. Sales at stores open at least a year, a key gauge of a retailer’s health, slumped 7.7%.

The department store chain also cut back on orders ahead of the critical holiday period, spooking investors and sending shares down almost 8%. The news from Kohl’s capped a heavy week of retail-industry corporate earnings, and the results were mixed.

Kohl’s has struggled for years, and last month it called off buyout talks with Franchise Group, the owner of Vitamin Shop, citing economic conditions.

Yet, industry analysts say missteps by Kohl’s has put it in a vulnerable position. Neil Saunders, managing director at GlobalData Retail said Kohl’s “has lost the plot” in terms of merchandising and appears to be pursuing a seemingly random approach when it fills its store shelves.

The result has been a “jumble of disjointed product in stores, which is exacerbated by a very serious deterioration in shopkeeping standards.”

Sales at Kohl’s Corp. fell to $4.09 billion in the second quarter compared with $4.45 billion during the same stretch last year. Sales at stores open at least a year, a key gauge of a retailer’s health, slumped 7.7%.

The company, based in Menomonee Falls, Wisconsin, cut its profit outlook in half from between $6.45 to $6.85 per share to between $2.80 and $3.20. Kohl’s has been among the most vulnerable because it sells mostly discretionary items like clothing, and it caters largely to middle-income shoppers who’ve been hit hard by rising prices.

“Our second-quarter results reflect a middle-income customer that has become more cost-conscious and is feeling greater pressure on their budgets,“ CEO Michelle Gass said.

"Therefore, we are seeing customers make fewer shopping trips, spend less per transaction and shift towards our value-oriented private brand.”

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