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Bear of the Day: Kohl's (KSS)

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Kohl’s Corp. (KSS - Free Report) is a major department store chain here in the U.S., operating more than 1,100 locations across 49 states. They offer moderately-priced apparel, footwear and accessories for women, men and kids, as well as beauty and home décor.

Shares Slip on Disappointing Holiday Sales

Back in early January, KSS stock was down nearly 9% after the company released disappointing holiday sales numbers. Comparable sales fell 0.2% in November and December compared to expectations of 0.4% for the full Q4.

While Kohl’s managed to outperform department store peers Macy’s (M - Free Report) and J.C. Penney , the holiday numbers were especially underwhelming since the company expanded its Amazon (AMZN - Free Report) returns program; management had expected that initiative to lift store traffic.

“We continue to see momentum in key areas including our digital business, active, beauty and children's, and solid performance in footwear and men's. This was offset by softness in women's, which we are working with speed to address,” said CEO Michelle Glass.

Analysts have turned bearish on Kohl’s, with twelve cutting estimates in the last 60 days for fiscal 2020

Earnings are expected to see double-digit negative growth for the year, and the Zacks Consensus Estimate has dropped eight cents for that same time period from $4.84 to $4.76 per share.This sentiment has stretched into 2021, too.

Kohl's Corporation Price and Consensus

 

KSS is now a Zacks Rank #5 (Strong Sell).

Shares of the retailer are down over 14% in the last six months, and have lost more than 34% in the last one year. The S&P 500 is up 15.4% and 23% in comparison.

Going forward, Kohl’s definitely has some work do, as comps continue to slip and reliance on markdowns and discounts grow. Just like other brick-and-mortar retailers, it needs to figure out ways to bring back shoppers to stores that does not include margin-diminishing promotions.

Earnings for fiscal 2019 are now expected to come in at the low end of its previous range of $4.75 to $4.95 per share. Kohl’s reports fourth quarter earnings on March 3, followed by an investor day conference on March 16.

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