Kohl’s cuts 2022 outlook, capping mixed week for retailers

Aug 18, 2022, 6:49 AM | Updated: Aug 19, 2022, 12:03 am
Shoppers enter a Crocs store, Thursday, July 7, 2022, in Pembroke Pines, Fla.  On Wednesday, Aug. 1...

Shoppers enter a Crocs store, Thursday, July 7, 2022, in Pembroke Pines, Fla. On Wednesday, Aug. 18, the Commerce Department reported that retail sales were flat last month after having risen 0.8% in June. Sales were down 0.5% at department stores and 0.6% at clothing stores. (AP Photo/Marta Lavandier)

(AP Photo/Marta Lavandier)

Kohl’s on Thursday slashed its sales and profit expectations for the year, a result of its stepped up price cutting to shed unwanted merchandise.

The department store chain also cut back on orders ahead of the critical holiday period, spooking investors and sending shares down almost 8%.

The news from Kohl’s capped a heavy week of retail-industry corporate earnings, and the results were mixed.

Kohl’s has struggled for years, and last month it called off buyout talks with Franchise Group, the owner of Vitamin Shop, citing economic conditions.

Americans are under strain from inflation hovering near four-decade highs, and that played out in the financial performance at Kohl’s and almost every other retailer in the recent quarter.

Soaring prices have forced families to grow more cautious with spending, cutting back on new clothing, electronics, furniture and almost everything else that is not absolutely necessary.

Exacerbating the problem for retailers, Americans’ spending habits have as the pandemic eases have shifted faster than anyone expected. After being cooped up at home, U.S. consumers seemed to shift almost overnight to spending on restaurants, shows or travel.

Those same forces have tripped up retailers that sailed through the pandemic, posting record sales. Both Target and Walmart released quarterly earnings this week and they too are wrestling with inflation and shifting demand.

On Wednesday the Commerce Department reported that retail sales were flat last month after having risen 0.8% in June. Sales fell 0.5% at department stores and 0.6% at clothing stores.

That has left retailers with huge inventories of TVs, stereos, laptops, and clothing that perhaps is too casual for nights out or work, forcing them to slash prices.

And because of inflation, there is clear evidence that many families are trading down when they shop. More are opting for private-label brands, which are typically cheaper, over national brands. They’re limiting their trips to the store and buying less when they show up. They’re swapping out things like deli meats for cheaper foods like hot dogs.

Kohl’s has been among the most vulnerable because it sells mostly discretionary items like clothing, and it caters largely to middle-income shoppers who’ve been hit hard by rising prices.

“Our second-quarter results reflect a middle-income customer that has become more cost conscious and is feeling greater pressure on their budgets,” CEO Michelle Gass said. “Therefore, we are seeing customers make fewer shopping trips, spend less per transaction and shift towards our value-oriented private brand.”

June, when the average price for a gallon of gas in the U.S. surpassed $5, was the most difficult month of the quarter, Gass said. She noted that interestingly, Kohl’s is seeing more higher-income shoppers, and they’re spending more.

Yet industry analysts say missteps by Kohl’s has put it in a vulnerable position.

Neil Saunders, managing director at GlobalData Retail said Kohl’s “has lost the plot” in terms of merchandising and appears to be pursuing a seemingly random approach when it fills its store shelves. The result has been a “jumble of disjointed product in stores, which is exacerbated by a very serious deterioration in shopkeeping standards.”

Sales at Kohl’s Corp. fell to $4.09 billion in the second quarter compared with $4.45 billion during the same stretch last year.

Sales at stores open at least a year, a key gauge of a retailer’s health, slumped 7.7%.

The company, based in Menomonee Falls, Wisconsin, cut its profit outlook in half from between $6.45 to $6.85 per share, to between $2.80 and $3.20.

That is well short of Wall Street’s per share projections of $4.04.

Tapestry, which owns such Coach and Kate Spade, also issued a slightly pessimistic outlook for the year, but it cited COVID-19 lockdowns in China, where it has sizeable operations.

The company’s quarterly sales were essentially flat at $1.6 billion, but rose 15% to $6.7 billion for its full fiscal year.

The company anticipates 2023 revenue of about $6.9 billion on earnings in a range of $3.80 to $3.90 per share. Wall Street is calling for $6.88 billion in revenue with earnings of $3.87 per share.

Shares of New York-based Tapestry Inc., rose 46 cents to close at $37.57 Thursday. Kohl’s fell $2.62 to $31.33.

Macy’s and Nordstrom report second-quarter results next week.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Associated Press

Mayor: 5 shot dead in Central Texas neighborhood

McGREGOR, Texas (AP) — Five people were shot dead in a Central Texas residential neighborhood Thursday, officials said. The incident happened at about 7:30 a.m. Thursday morning in McGregor, about 20 miles (32 kilometers) southwest of Waco. An armed man shot at police officers who arrived at the scene, McGregor Mayor Jimmy Hering told KCEN-TV. […]
16 hours ago
Associated Press

Mayor: 5 shot dead in Central Texas neighborhood

McGREGOR, Texas (AP) — Five people were shot dead in a Central Texas residential neighborhood Thursday, officials said. The incident happened at about 7:30 a.m. Thursday morning in McGregor, about 20 miles (32 kilometers) southwest of Waco. An armed man shot at police officers who arrived at the scene, McGregor Mayor Jimmy Hering told KCEN-TV. […]
16 hours ago
This image from video provided by KABC-TV shows a truck owned by Anthony John Graziano after a shoo...
Associated Press

Police: Teen saw father shoot, kill mother in California

LOS ANGELES (AP) — The Southern California teenager killed this week alongside her father in a shootout with law enforcement was with him a day earlier when he fatally shot her mother, police said Thursday. Savannah Graziano, 15, was in the back of her father’s pickup truck when he gunned down her mother, Tracy Martinez, […]
16 hours ago
Minneapolis Mayor Jacob Frey, left, and his nominee for Minneapolis Police Department police chief ...
Associated Press

NJ official eyed for chief in city where George Floyd died

MINNEAPOLIS (AP) — Minneapolis Mayor Jacob Frey said Thursday that he is nominating a former public safety director from Newark, New Jersey, as his top pick for the city’s next police chief, at a time when the department is struggling with depleted staffing and the uncertainty of an ongoing federal investigation following the killing of […]
16 hours ago
Associated Press

Scrutinized charter school operator drops Tennessee appeals

NASHVILLE, Tenn. (AP) — A contentious charter school operator linked to a conservative Michigan college has dropped its appeals in Tennessee seeking to open three schools there, despite local school boards rejecting their initial request. The school operator’s decision ends high-profile speculation — at least for now — over the fate of the charter schools. […]
16 hours ago
Associated Press

NY proceeds with plan for zero-emission vehicles by 2035

ALBANY, N.Y. (AP) — A decision by regulators in California has cleared the way for New York to move forward on its goal of requiring all new cars and trucks sold in the state to be zero-emission by 2035, New York Gov. Kathy Hochul said Thursday. State regulations being crafted by the end of the […]
16 hours ago

Sponsored Articles

...
Children’s Cancer Network

Children’s Cancer Network celebrates cancer-fighting superheroes, raises funds during September’s Childhood Cancer Awareness Month

Jace Hyduchak was like most other kids in his kindergarten class: He loved to play basketball, dress up like his favorite superheroes and jump as high as his pint-sized body would take him on his backyard trampoline.
...
Sanderson Ford

Don’t let rising fuel prices stop you from traveling Arizona this summer

There's no better time to get out on the open road and see what the beautiful state of Arizona has to offer. But if the cost of gas is putting a cloud over your summer vacation plans, let Sanderson Ford help with their wide-range selection of electric vehicles.
...
Mayo Clinic Orthopedics and Sports Medicine

Why your student-athlete’s physical should be conducted by a sports medicine specialist

Dr. Anastasi from Mayo Clinic Orthopedics and Sports Medicine in Tempe answers some of the most common questions.
Kohl’s cuts 2022 outlook, capping mixed week for retailers