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Kohl’s Stock Nosedives as Weak Sales Sound Alarm for Investors

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Kohl's

Kohl’s stock (KSS) dropped to an almost seven-year low Thursday after its preliminary fourth-quarter results sent investors rushing to offload shares.

The department store chain said that same-store sales in the three months ended Jan. 30 inched up 0.4%, missing FactSet expectations of 1.7%. Meanwhile, revenue increased by just 0.8% for the quarter and 1 percent for fiscal 2015 because of higher-than-expected markdowns on both year-round and seasonal merchandise.

“While we experienced our fifth consecutive quarter of positive comparable sales increases, sales were very volatile and less than planned in the fourth quarter,” Kevin Mansell, Kohl’s chairman, chief executive officer and president, disclosed. “We experienced a very strong holiday selling season from the week of Thanksgiving through Christmas [but] these results were offset by a very slow start to the quarter in early November and a weaker-than-expected January as soft demand for cold-weather goods led to lower store traffic in these more discretionary shopping periods.”

The top-performing categories for the fourth quarter were footwear and home, while accessories did the worst. On a regional basis, Kohl’s said its stores in the West were strong, while Mid-Atlantic and South Central locations struggled.

It wasn’t all doom and gloom, however.

“We were pleased with the performance of our digital business as online generated orders and sales each grew approximately 30 percent during the quarter,” Mansell said, adding, “Our ability to provide both ship-from-store and buy online, pickup in store capabilities in all stores really resonated with our customer.”

With that being said, the Menomonee Falls, Wisconsin-based retailer has lowered its fiscal 2015 earnings to be between $3.95 and $4.00 per diluted share, compared with earlier estimations toward the low end of $4.40 to $4.60 per diluted share.

Kohl’s shares were down 19 percent in afternoon trading Thursday. The retailer, which has 1,165 stores in 49 states, will report its full results on Feb. 25.

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