Kohl's joins department store retailers to warn of weak 2024 growth
Reuters
Published Mar 12, 2024 07:09AM ET
Updated Mar 12, 2024 09:51AM ET
By Savyata Mishra
(Reuters) -Kohl's on Tuesday forecast annual sales and profit largely below market expectations, joining Macy's (NYSE:M) and Nordstrom (NYSE:JWN) to warn of a challenging year for U.S. department stores.
Shares of Kohl's (NYSE:KSS), which gained about 14% in 2023, fell 2% in early trading as it posted a steeper-than-expected drop in same-store sales in the fourth quarter.
The retailer's results round up a tough year for American department store chains, which have struggled as budget-conscious shoppers shift to off-price retailers like TJX (NYSE:TJX) and Burlington Stores (NYSE:BURL).
Kohl's sales fell for eight quarters in a row, similar to trends seen by rivals Macy's and Nordstrom.
"Kohl's still has plenty more work to do as its top-line results fell short and are still well behind its pre-pandemic revenues," said Zak Stambor, senior analyst at Emarketer.
Inventory declined 10% in the fourth quarter, helping a 937 basis points jump in gross margin.
It forecast fiscal 2024 earnings per share in the range of $2.10 to $2.70, the mid-point of which was below analysts' average estimate of $2.61, according to LSEG data.
Kohl's is planning to spend about $500 million to expand its partnership with LVMH-owned beauty brand Sephora and expects sales to exceed its prior goal of $2 billion by 2025, CEO Tom Kingsbury said.
The company has leaned on its co-brand cards to offset impact from a new credit card late fee ruling in the second half and forecast net sales between a 1% decline and 1% increase, compared to estimates of 0.4% drop.
Despite weaker demand, CEO Kingsbury's bet on fresher styles, leaner inventories, shift to monthly discounts instead of seasonal, and more Sephora shops helped drive margins during the holiday season.
Same store sales fell 4.3%, compared with estimates of a 3.6% drop. Earnings per share came in at $1.67, above estimates of $1.28.
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Written By: Reuters
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