(Bloomberg) — The picky American retail customer still doesn’t want what Kohl’s Corp. trying to sell.
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The mid-range department store chain lowered its full-year guidance after reporting first-quarter results that were wildly off the mark on almost every metric. Comparable sales, which measure the performance of stores open at least one year, fell 4.4% in the quarter ended May 4 – the ninth straight decline. Analysts had expected a decline of 1.7%.
Although Kohl’s offered deep discounts during that period, the company said sales of clearance items actually declined, leading to the loss of comparable sales. A sale of as much as 85% off was announced on the company’s website on Thursday.
The stock plunged as much as 25% during trading in New York, the most on record. Shares were down 5% this year through Wednesday, compared with a 9.7% gain for the Russell 1000 Index.
The Menomonee Falls, Wisconsin-based retailer has introduced partnerships with other brands to bring in customers, most notably with cosmetics chain Sephora. While Kohl’s cites strong growth in Sephora traffic, it doesn’t appear to be translating into many sales outside of its store-in-store locations.
The company, which hired board member Tom Kingsbury as CEO in February 2023 after a lengthy search, said the quarter’s results “did not meet our expectations and do not reflect the direction we are taking with our strategic initiatives.”
Picky consumers
Thursday’s retail results reinforce that inflation-weary consumers are looking for value and are picky about what that means for them.
Foot Locker Inc. rose as much as 27%, the highest level since November 2017, after he said profits easily exceeded analyst expectations. Still, CEO Mary Dillon made a cautious comment in an interview.
“There are still pressures on consumers for us: exposure to inflation, interest rates and reduced savings,” Dillon said. “But it’s discretionary for a reason. They decide what to spend the money on.”
Dollar General Inc. said Thursday, in the midst of turnaround efforts under two-time CEO Todd Vasos, that gains in traffic and market share fueled revenue growth even as consumers spent less per transaction on average. Consumables are growing, but the number of sustainable items such as clothing, seasonal products and household products is decreasing.
Best Buy Co., the last major U.S. electronics retailer, is all about durable goods — and comparable sales fell 6.1% in the most recent quarter, missing estimates. Still, the company performed better in terms of profits thanks to its membership and service offering.
Discount chain Burlington Stores Inc. rose as much as 16% in premarket trading after reporting comparable sales and profits that beat expectations. The company also raised its full-year guidance. “The quarter started slowly in February, likely due to poor weather and delayed tax refunds, but our sales trend picked up thereafter,” CEO Michael O’Sullivan said in a statement.
–With help from Jaewon Kang and Kim Bhasin.
(Updates with stocks in fourth paragraph, Foot Locker in eighth paragraph.)
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