KSS Stock Is Getting Smoked
Online shopping has dramatically altered the rules of the retail industry, leaving some industry stalwarts like Kohl’s Corporation (NYSE:KSS) stock struggling to catch up.
This theme was apparent again this morning, after Kohl’s reported another round of dismal financial results. On Thursday, the retailer reported that first-quarter earnings fell a disturbing 50% year-over-year to $0.31 per share. This fell well short of the street’s consensus estimate of $0.37 per share. (Source: “Kohl’s Corporation Reports First Quarter Financial Results,” Yahoo! Finance, May 12, 2016.)
Same-store sales, or sales from stores open longer than a year, nosedived 3.9%. Total revenues came in at $3.97 billion, down 3.7% from the same period last year. This top-line figure also missed Wall Street’s estimates of $4.13 billion.
Investors were quick to express their disappointment. Following the release, Kohl’s stock plunged more than six percent in pre-market trading. Overnight, KSS stock lost more than $440 million in market value.
“First quarter sales were challenging,” Kohl’s chairman, chief executive officer, and president, Kevin Mansell, said in a press release. “Despite the sales environment, we were able to manage our gross margin and inventory levels consistent with our expectations as we took the markdowns necessary to clear excess inventory. We managed our expenses effectively throughout the quarter as every area contributed to our savings versus our plan.” (Source: Ibid.)
The disappointing report from Kohl’s is just the latest sign of the changing retail landscape. Earlier this week, shares of Gap Inc (NYSE:GPS) and Macy’s, Inc. (NYSE:M) were hammered after posting disappointing financial results. A host of factors have conspired to crush brick-and-mortar shops, from online shopping to changing consumer tastes and to a glut of retail space.
Industry insiders don’t see the situation changing anytime soon. In an interview with CNBC on Thursday, retail analyst Jan Kniffen predicted one-third of American shopping centers will shut down in the coming years. In his view, about 400 of America’s 1,100 malls will fail. (Source: “1 in 3 American malls are doomed: Retail consultant Jan Kniffen,” CNBC, May 12, 2016.)