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Kohl's (KSS) shares plunge by over 16% Tuesday morning following the department store chain's mixed fourth quarter earnings results and full-year guidance that anticipates a 4 to 6% comparable sales decline in 2025.
Yahoo Finance senior retail reporter Brooke DiPalma joins the Morning Brief team in analyzing the biggest takeaways from Kohl's earnings call, the first to feature new CEO Ashley Buchanan.
To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.
Looking at Kohl's shares plunging more than 15% in trading this morning. Kohl's anticipating a larger than expected drop in comp sales for 2025. For the three biggest takeaways from the retailer's cautious outlook, we've got Yahoo Finances own Brooke DiPalma. Brooke, just the latest retailer to issue a cautious outlook. What stood out to you?
Absolutely. This is yet another retailer to really spark a concern that we're going to experience this weaker consumer in 2025 that's going to take a toll on their sales. So let's talk about that cautious outlook. The company, or rather executives on the call this morning, said that cautious outlook includes time needed to make necessary changes and uncertainty in the macro environment. Now, with that cautious outlook in mind, same-store sales are expected to drop between 4 to 6%. That was far lower than Wall Street's estimates. Earnings also expected to come in lower. And once again, executives saying that this is taking into consideration the turnaround, which the CEO says is very achievable, but he also added that it is going to take time. Now, keep in mind, Ashley Buchanan is a former Michaels Company CEO. That's the art and craft store. He joined the company in January 15th, roughly two months ago. But prior to Ashley's tenure at Michaels, he held a variety of senior executive roles at Walmart and Sam's Club for nearly 13 years. And he's certainly taking the home here and making changes right away. Back in January when he joined, they announced plans to cut nearly 10% of their corporate workforce, and they also plan to close 27 underperforming stores by April. But leaning further into these focus areas is really this idea of assortment, value, and omnichannel. With that assortment in mind, the company did say that they expect to have a more balanced assortment. They plan to refocus attention on core categories that they said they really lost traction, including fine jewelry and proprietary brands, really focusing in on the need for value. Now, on the call, Ashley Buchanan did say from a macro perspective, you had a pretty decent bifurcation among income levels. He said that those making less than 50, that consumer is pretty constrained from a discretionary standpoint. And less than 100, he said that consumer is also facing some challenges. But he said that, "I don't think we're an anomaly on that." If we look back in recent weeks, we've heard from Macy's, Walmart, Target, also cautioning this weaker than expected guidance for 2025.
All right, Kohl's shares getting rocked right now, down 16%. Brooke, thanks so much for taking the time to break this down. Appreciate it.
Mhm.