Kohl's sales gain fails to reassure Wall Street's retail jitters

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A Kohl's Corp. department store in Chicago, Illinois
A Kohl's Corp. department store in Chicago, Illinois Credit: Christopher Dilts/Bloomberg

In yet another U.S. retail disappointment, shares of Kohl's Corp. sank after its quarterly report -- a sign that jitters about department-store prospects persist on Wall Street.

The company's forecast for earnings per share narrowly missed the midpoint of analysts' estimates, helping to trigger a share decline of as much as 2.8 percent on Tuesday. In other key measures, such as same-store sales, Kohl's outpaced projections. But it wasn't enough to inspire investors after the company's shares neared record highs in recent sessions.

"Retail stocks heading into the second quarter are priced for perfection or more," said Poonam Goyal, a senior analyst at Bloomberg Intelligence. "Sometimes a decent beat and good quarter just isn't enough."

While Kohl's stock had advanced 45 percent this year through yesterday's close, the retailer now joins department-store peer Macy's in watching its shares decline in spite of a largely positive quarterly result. Last week, Macy's, which had also advanced sharply this year, plunged 16 percent after earnings.

Same-store sales rose 3.1 percent in the quarter ended Aug. 4. Analysts had expected an increase of 2.6 percent, according to Consensus Metrix. Excluding some items, profit per share also topped estimates in the period, while revenue of $4.3 billion was slightly higher than projections.

Kohl's sees profit of $5.15 to $5.55 per share this year, up from its previous range. The midpoint of the range, $5.35, was short of estimates by a penny.

Chief Executive Officer Michelle Gass, who took the helm in May, has been trying to distance Kohl's from its peers. The chain has managed to keep its stores open while retailers including J.C. Penney, Macy's and Sears Holdings Corp. have been forced to shutter weaker locations.

Kohl's, which has a larger market capitalization than the others, has also teamed up with companies such as Aldi supermarkets and Amazon. Shoppers can test out Amazon electronics in some stores and return other merchandise purchased on Amazon at certain locations.

Last week, J.C. Penney plunged to historic lows after its second-quarter same-store sales missed estimates and the company put more items on clearance to sell excess inventory. Nordstrom was a bright spot for the industry: The company's comparable sales were almost four times higher than analysts projected.

-- Bloomberg News

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