Kohl’s posts weak Q3 amid declines in core business, lowers outlook; CEO to retire
Kohl’s Corp. reported disappointing third-quarter earnings and revenue, including its eleventh consecutive quarter of comp sale declines, and lowered its full-year sales outlook as the company readies for a new CEO.
In a statement, CEO Tom Kingsbury, who will pass the baton to Ashley Buchanan, currently CEO of Michaels Cos., on Jan. 15, said that sales remained soft in the company’s core apparel and footwear businesses.
[READ MORE: CEO shakeups at Kohl’s, Michaels]
“Although we had a strong collective performance across our key growth areas, including Sephora, home decor, gifting, and impulse, and also benefited from the opening of Babies"R" Us shops in 200 of our stores, these were unable to offset the declines in our core businesses,” Kingsbury said.
Importantly, he added, the company delivered gross margin expansion and managed expenses tightly in the quarter.
Net income fell to $22 million, or $0.20 a share, for the quarter ended Nov. 2. from $59 million, or $0.53 a share, in the year-ago period. Analysts had expected earnings per share of $0.28.
Net sales fell 8.8% to $3.51 billion, below estimates of $3.64 billion. The company has now missed net sales expectations for every quarter over the past three years.
Comparable sales fell 9.3%, worse than expected. It was the retailer’s sixth-straight miss. Transactions were down about 3% during the quarter.
“We are not satisfied with our performance in 2024 and are taking aggressive action to reverse the sales declines,” stated Kingsbury. “We must execute at a higher level and ensure we are putting the customer first in everything we do. We are approaching our financial outlook for the year more conservatively given the third quarter underperformance and our expectation for a highly competitive holiday season.”
Going forward, Kohl's is highly focused on driving traffic in response to the softer trends it experienced during the third quarter, Kingsbury said on the earnings call.
“We are increasing our touchpoints with our most engaged customers through more targeted offers and direct mail," he told analysts.
The company lowered its full-year outlooks for earnings per share to $1.20 to $1.50 from its previous guidance of $1.75 to $2.25. Net sales are now expected to decline of 7% to 8% compared to a decrease of 4% to 6%. Comparable sales are now expected to decline from 6% to 7% compared to the previous estimate of falling 3% to 5%.
Kohl’s operates more than 1,100 stores in 49 states.
