Kohl’s lowered its expectations for the year after sales collapsed in the second quarter, sending its stock down 9% at the opening bell on Thursday, ending a mixed week for retailers.
The company that owns Coach and Kate Spade also released a sales outlook for the year that fell slightly short of Wall Street expectations, sending its stock falling on a day when broader markets moved higher.
Kohl’s has struggled for years, and rising inflation on top of rapidly evolving consumer spending patterns has exacerbated its problems.
Those same forces have also tripped major retailers. Both Target and Walmart released quarterly earnings, and they too are grappling with inflation and shifting demand.
Revenue at Kohl’s fell to $4.09 billion in the second quarter, compared to $4.45 billion in the same period last year.
Sales at stores that have been open for at least a year, an important indicator of a retailer’s health, fell by 7.7%.
The company, based in Menomonee Falls, Wisconsin, halved its earnings outlook, from between $6.45 to $6.85 per share, to between $2.80 and $3.20.
That’s far less than Wall Street’s per share forecast of $4.04.
Americans are pulling back on spending on non-essential items as prices rise, and they’re also spending their money elsewhere as the easing pandemic allows for more freedom of movement. Last month, Kohl ended exclusive talks with Franchise Group, the owner of Vitamin Shop and other stores, for a buyout deal with a potential of about $8 billion.
At Tapestry, the luxury goods retailer that owns Coach and Kate Spade, quarterly sales were essentially flat at $1.6 billion, but rose 15% to $6.7 billion for the full fiscal year.
The company expects revenue of approximately $6.9 billion in 2023 on earnings in a range of $3.80 to $3.90 per share. Wall Street claims revenue of $6.88 billion with earnings of $3.87 per share.
Shares of Tapestry fell about 1%.
On Wednesday, the Commerce Department reported that retail sales were flat last month after rising 0.8% in June. At department stores, turnover fell by 0.5% and at clothing stores by 0.6%.
“Second quarter results were impacted by a weakening macro environment, high inflation and lower consumer spending, which put pressure on our middle-income customers in particular,” said Kohl CEO Michelle Gass.
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