Kohl’s (KSS) comeback attempt is falling flat as the department store chain reported fourth quarter results that showed steep drops.
On Tuesday before market open, Kohl’s reported that Q4 revenue and same-store sales declined 9.4% and 6.7% year over year, respectively. Adjusted earnings per share came in at $0.95, compared to $1.67 in the year-ago period.
Its 2025 outlook was not any better. The company expects same-store sales to fall 4% to 6%, far more than the 0.55% anticipated. Earnings per share of $0.10 to $0.60 were also far below estimates of $1.24.
Kohl’s stock dropped 24% in morning trading and has shed 65% in the past year.
“I want to set the expectations that this turnaround, while very achievable, is going to take some time,” CEO Ashley Buchanan said on the earnings call.
This is the first time Buchanan has addressed investors since taking over the role in January. He quickly announced plans to cut roughly 10% of Kohl’s corporate workforce and close 27 stores by April.
Macy’s (M), which also announced cautious guidance last week, plans to close 66 stores this year and is in the midst of a turnaround attempt itself.
Kohl’s CFO Jill Timm, who has served in the role since 2019, added that the guidance recognizes “time needed to make necessary changes and uncertainty in the macro environment.”
Buchanan said customers who make $50,000 or less per year are “pretty constrained from a discretionary standpoint,” while those making less than $100,000 are still challenged due to higher grocery and rent prices in recent years.
As of 12:16:19 PM EDT. Market Open.
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Morningstar analyst David Swartz said investor confidence in Kohl’s was “at an all-time low” and that the stock price was “completely understandable.”
“How many turnaround strategies have there been at Kohl’s?” he said. “It’s the same story over and over.”
Efforts of former CEO Tom Kingsbury, who joined in 2022, didn’t pan out.
“Kingsbury came in with a lot of big plans, and seemingly with some momentum, given that he was supported by the activists who had targeted Kohl’s three years ago,” Swartz said, adding, “The reality is … his tenure [as] CEO was close to a disaster, and now they’re starting over again with a new CEO.”
Telsey Advisory Group CEO Dana Telsey wrote in a note to clients that this turnaround will likely prove difficult.”
“New leadership will look to bring stabilization to the business following several years of volatile performance … Visibility to a timeline to a turnaround to better profitability is challenging in our view, particularly against an increasingly uncertain macro backdrop,” she wrote.
