Kohl’s Corporation (KSS - Analyst Report) recently lowered its earnings guidance for fourth quarter and full year 2013. Kohl’s is scheduled to release its fourth quarter and full year 2013 results on Feb 27.
For the fourth quarter, the Menomonee Falls, WI-based retailer expects comparable store sales to decline 2.0%, at the higher end of previous expectation of a 0%–2% decline. Though comp sales improved 0.8% in November and December, and the company witnessed lower-than-expected sales in January due to decline in traffic and lower merchandise on clearance. Volatile retail sales environment and lower consumer confidence led to lower traffic.
Further, lower comparable sales along with higher than expected costs, due to unanticipated expenses related to its e-commerce business, led to a cut in the fourth quarter earnings guidance. The company now anticipates its earnings to be approximately $1.53 in fourth quarter 2013, compared with the previous guidance of $1.59 –$1.74 per share.
Kohl’s also slashed its earnings view for full year 2013 and now expects earnings to be approximately $4.03, compared with the previous guidance of $4.08 to $4.23 per share, owing to soft comparable sales. The company had earlier lowered its earnings guidance following soft results in the third quarter.
Not only Kohl’s, several big retailers, including Wal-Mart Stores Inc. (WMT - Analyst Report) and hhgregg Inc (HGG - Analyst Report) have cut their fourth-quarter outlooks.
Walmart now expects its fourth quarter earnings to be at or slightly below the low end of its previous forecast of $1.60 to $1.70 per share. For fiscal 2014, Walmart expects its earnings to be at or slightly below the low end of its previous forecast of $5.11 to $5.21 per share.
The lowered expectation is due to the restructuring of the Sam's Club unit in the United States, food safety allegations, and weakness in emerging markets, including the closure of stores in Brazil and China. The company also lowered its fourth-quarter comparable store sales expectation due to reduced food stamp benefits under SNAP (the U.S. government Supplemental Nutrition Assistance Program) and unfavorable weather, which resulted in store closures.
hhgregg lowered its top and bottom line guidance for fiscal 2014 on Jan 31 due to weak third quarter results resulting from increased promotional spending and weak holiday season sales. Another retailer which suffered from a weak holiday season was J. C. Penney Company, Inc. (JCP - Analyst Report) , which lowered comps for the fourth quarter.
Though we are positive on Kohl’s sound long-term fundamentals, the current scenario is alarming for its investors. Kohl’s holds a Zacks Rank #4 (Sell).