Kohl's stock sinks as sales keep falling, dashing hopes that a recovery has taken hold

By Tomi Kilgore

The disappointing earnings report comes just one quarter after the stock had enjoyed a record rally after upbeat results

Kohl's stock drops as sales fall again and miss expectations, dashing hopes that a turnaround was taking hold.

Shares of Kohl's dropped toward a seven-month low in early Tuesday trading, after the department-store chain extended its long streak of sales declines and indicated that trend won't change this year.

While fiscal fourth-quarter net income more than doubled, continued sales weakness showed that the restructuring implemented early last year by the new CEO at the time - who was fired less than four months later - has not yet taken hold. While current CEO Michael Bender said that "meaningful progress" has been made, he acknowledged that sales were softer than projected.

The stock (KSS) dropped 8% in premarket trading, putting it on track to open at the lowest price seen since Aug. 26.

The postearnings weakness in the stock is also a sign that investors doubt recovery hopes following third-quarter results have been fully erased. The stock rocketed a one-day record 42.5% on Nov. 25, mimicking the "meme stock" status it enjoyed earlier that year, as investors bet that a turnaround was in place.

The company reported comparable sales - or sales in stores open at least a year - for the quarter ending Jan. 31 that fell 2.8% from a year ago. That missed the average analyst estimate compiled by FactSet for sales to be down 1.5%. It marked the 16th straight quarter of year-over-year declines.

Net sales were down 3.9% to $4.97 billion, below the FactSet consensus of $5.02 billion, and has also declined every quarter for the past four years.

Net income jumped 160.4% to $125 million, and earnings per share of $1.07 beat the FactSet consensus of 86 cents. The gross-margin rate, a measure of how profitable revenue was, improved to 33.1% from 32.9%.

For the current full fiscal year, the company expects both net sales and comparable sales to be in the range of down 2% to flat, while the current FactSet consensus for net sales implies a 0.4% decline and for comparable sales to be down 0.6%.

The company also expected adjusted EPS, which excludes nonrecurring items, of $1 to $1.60 for the year, which surrounds expectations of $1.37.

The stock has tumbled 27.5% so far this year through Monday, while the State Street SPDR S&P Retail ETF XRT has slipped 2.9% and the S&P 500 index SPX has eased 0.7%.

-Tomi Kilgore

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03-10-26 0828ET