Kohl’s trims sales forecast on weaker consumer spending, shares slump
11:24 am Tuesday, November 21st, 2023
By Granth Vanaik
(Reuters) -Kohl’s lowered the top end of its annual sales forecast and said it would be aggressive with promotions in the crucial holiday season as cost-conscious shoppers spend less at its department stores, sending its shares tumbling 11% on Tuesday.
American consumers have continued to defer non-essential purchases and focused on buying essentials as rising credit card debt and higher interest rates squeeze wallets, while warmer weather in recent months also hit demand for fall-season goods.
The trimmed outlook echoed retail bellwether Walmart that last week took a cautious stance for holiday spending, which is expected to grow at the slowest pace in five years.
Chief Executive Tom Kingsbury said Kohl’s was going to be “very aggressive” with promotions during the holiday season amid the uncertain economic environment, as it looks to gain more market share.
“It’s pretty clear across the discretionary retail space that the environment is choppy and will likely continue to be so through the holiday in 2024,” said Fitch analyst David Silverman.
Kohl’s now expects annual sales to fall between 2.8% and 4%, against its previous projection for a 2% to 4% drop, and analysts’ estimate for a 2.5% fall in LSEG data.
Its comparable sales fell for a seventh straight quarter, declining 5.5% compared to a fall of 3% expected by analysts.
“There was obvious weakness in our cold weather businesses during the third quarter,” said Kingsbury.
However, Kohl’s inventories fell 13%, as its efforts to trim stocks from their 2022 highs going into the holiday season began to pay off.
It raised the lower end of its annual profit forecast, expecting per-share earnings between $2.30 and $2.70, up from a previous forecast of $2.10 to $2.70.
Kohl’s reported a profit of 53 cents per share in the third quarter, beating expectations of 35 cents.
(Reporting by Granth Vanaik in Bengaluru; Editing by Milla Nissi)