Kohl’s is joining the parade of gloomy reports from retailers.
The mid-price department store chain reported first-quarter results that missed analysts’ estimates, weighed down by hefty costs as the department store operator’s sales dropped. It posted the biggest decline for a key revenue metric since the first quarter of 2009 when the economy was in a recession.
A lackluster end of year shopping season across much of the retail sector has become a spring funk. Macy’s Inc. slashed its profit and sales expectations for the year on Wednesday. Its key revenue measure marked the biggest drop since the downturn. Gap Inc. had some startling numbers and projections earlier this week.
All three retailers said they’ve seen a noticeable drop-off of spending since mid-March.
“There seems to be some more macro issues given performances of both ourselves and competition,” said Kevin Mansell, Kohl’s chairman, president and CEO, told investors during a call on Thursday.
Still, it’s hard to gauge how much of the weakness has been from the economy versus specific issues related to Kohl’s.
Like its department store rivals, Kohl’s is aiming to reinvent itself through a number of initiatives. It’s pushing national brands, while aiming to localize its assortments to local markets. About 70 percent of the assortment is now localized. It’s also investing in technology to allow the company to ship from stores and also providing online pickup. It’s also testing smaller formats.
For the three months ended April 30, Kohl’s Corp. earned $17 million, or 9 cents per share. A year earlier the Menomonee Falls, Wisconsin-based company earned $127 million, or 63 cents per share.
The current quarter included $64 million in impairments, store closing and other costs.
Earnings, adjusted for those costs, were 31 cents per share. That’s below the 36 cents per share that analysts surveyed by Zacks Investment Research were calling for.
Kohl’s revenue fell to $3.97 billion from $4.12 billion. Analysts polled by Zacks expected higher revenue of $4.12 billion.
Sales at stores open at least a year, a key gauge of a retailer’s health, declined 3.9 percent. This metric excludes results from locations recently opened or closed. It marked the biggest decline since first quarter of 2009 when that figure declined 4.2 percent.
Mansell said Kohl’s had to take some markdowns in order to clear excess inventory.
In trading Thursday, shares of Kohl’s were down $3.49, or 9 percent, to $35.22. The stock is down 54 percent from a year ago.