Kohl’s Corporation (KSS Quick QuoteKSS - Free Report) unveiled that its Board of Directors entered into exclusive negotiations with a holding company of a collection of market-leading and emerging brands — Franchise Group, Inc. (“FRG”) for the potential sale of the former for $60 per share. The three weeks negotiation period will help FRG and its financing partners to work on due diligence and financing arrangements. This period will also enable the involved parties to finish the negotiation of binding documentation.

Management highlighted that the transaction is subject to approvals of the Boards of Directors of Kohl’s and FRG. All said, Kohl’s remained committed to maximizing shareholders value.

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What Else Should You Know?

Kohl’s lowered its guidance for full-year 2022 due to dismal results in the first quarter, with the top and the bottom line declining year over year and lagging the Zacks Consensus Estimate. While the quarter began on a solid note, sales significantly weakened in April as the company faced tough comparisons with the year-ago period, which benefited from the stimulus. Also, an inflationary consumer landscape in the quarter under review hurt sales.

Kohl's posted adjusted earnings of 11 cents per share, which plunged 90% from the $1.05 reported in the year-ago period. The bottom line came way below the Zacks Consensus Estimate of 75 cents. Total revenues came in at $3,715 million, down 4.4% from the prior-year quarter’s levels. The metric fell short of the Zacks Consensus Estimate of $3,854 million. Net sales dropped 5.2% in the quarter to $3,471 million. Comps also decreased by 5.2% in the quarter.

Management lowered its guidance for full-year 2022, considering the first-quarter results and macroeconomic landscape. Management does not expect many headwinds including inflation to subside in the near term. It now expects net sales growth of flat to 1%. The operating margin is likely to be 7-7.2%. Kohl’s envisions earnings per share (EPS) in the range of $7.45-$7.85 (excluding non-recurring charges). The company posted an adjusted EPS of $7.33 in full-year 2021. Earlier, management expected net sales to grow 2-3%. The operating margin was anticipated at 7.2-7.5% and the EPS was guided in the range of $7.00-$7.50 (excluding non-recurring charges).

The Zacks Rank #5 (Strong Sell) company’s shares have slumped 21.1% in the past three months compared with the industry’s 1.3% decline.

Retail Stocks to Bet on

Here are some better-ranked stocks — Dillard's, Inc. (DDS Quick QuoteDDS - Free Report) , Build-A-Bear Workshop, Inc. (BBW Quick QuoteBBW - Free Report) and The Kroger Co. (KR Quick QuoteKR - Free Report) .

Dillard's, a retail department store operator, sports a Zacks Rank #1 (Strong Buy). DDS has a trailing four-quarter earnings surprise of 224.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Dillard's current financial year sales suggests growth of 6.1% from the year-ago period’s reported figure.

Build-A-Bear, a multi-channel retailer of plush animals and related products, currently carries a Zacks Rank #2 (Buy). BBW has a trailing four-quarter earnings surprise of 169.7%, on average.

The Zacks Consensus Estimate for Build-A-Bear's current financial year sales suggests growth of 10.4% from the year-ago period's reported figures.

Kroger, which operates food and drug stores, multi-department stores, marketplace stores and price impact warehouses, carries a Zacks Rank #2. KR has a trailing four-quarter earnings surprise of 22.1%, on average.

The Zacks Consensus Estimate for Kroger’s current financialyear sales suggests growth of 3.2% from the year-ago period’s level.