FX.co ★ Kohl's Cuts FY24 Outlook On Q1 Loss; Stock Dips In Pre-market - Update

Shares of Kohl's Corp. (KSS) plunged over 21% during pre-market trading on the NYSE after the department store chain revised its fiscal 2024 outlook downwards, following a first-quarter loss that fell short of market expectations.

Tom Kingsbury, Kohl's CEO, stated, "Our first-quarter results did not meet our expectations and are not indicative of the direction we aim to take with our strategic initiatives. Lower clearance sales compared to last year represented a more than 600 basis point drag on comparable sales. We are now approaching our financial outlook for the year more conservatively due to first-quarter underperformance and ongoing consumer environment uncertainty."

For the full fiscal year 2024, Kohl's now anticipates adjusted earnings per share (EPS) to be between $1.25 and $1.85, with net sales expected to decline by 2% to 4%.

Analysts, on average, projected the company to report EPS of $2.33 on sales of $16.56 billion, reflecting a 0.2% year-over-year decline, according to Thomson Reuters. These analyst estimates typically exclude special items.

Previously, the company had estimated adjusted EPS to be between $2.10 and $2.70, with net sales fluctuating between a 1% decline and a 1% increase.

The operating margin for the year is now expected to be between 3.0% and 3.5%, and comparable sales are anticipated to decrease between 1% and 3%.

The earlier outlook projected comparable sales to range from flat to a 2% increase and an operating margin between 3.6% and 4.1%.

Kohl's guidance includes the potential impact of upcoming changes to credit card late fee regulations in the second half of 2024.

In fiscal 2023, the company posted net income of $2.85 per share on net sales of $16.6 billion, with a 4.7% decline in comparable sales and an operating margin of 4.1%.

On May 15, Kohl's Board of Directors declared a quarterly cash dividend of $0.50 per share, payable on June 26 to shareholders of record as of June 12.

In the first quarter, Kohl's reported a loss of $27 million, compared to a profit of $14 million in the same period last year. The loss per share was $0.24, compared to a profit of $0.13 a year ago. Analysts had projected $0.04 per share.

Net sales for the quarter dropped to $3.18 billion from $3.36 billion in the same period last year, with comparable sales decreasing by 4.4%.

In pre-market trading on the NYSE, Kohl's shares were down approximately 21.4%, trading at $21.42.