Finance

First-Quarter Sales at Kohl’s Decline, and Predictions Are Revised Downward

In April, sales declined, but the company anticipates a rebound later this year when Sephora and other recent efforts take effect.

Kohl’s Corp. joined the ranks of retailers announcing dismal results, as its shares fell another 7.3% in premarket trade on Thursday, following an 11% plunge on Wednesday due to market turbulence. Thursday’s trading price for the stock was $40.

The retailer reported Thursday that its first-quarter sales decreased, cutting the company’s sales and profitability forecast for 2022.

First-Quarter Sales at Kohl's Decline, and Predictions Are Revised Downward

However, the firm stated that it remains committed to its long-term plan, which is centred on rolling out Sephora shops within its stores and continuing to build its reputation as a destination for casual and active clothing for the family and strong values. Additionally, Kohl’s continues to explore bids to acquire the company from retailers and private equity groups.

Comparable to the prior year’s first quarter, Kohl’s reported a net income of $14 million, or $0.11 per share, for the period ending April 30.

Net sales and comparable sales for the first quarter declined by 5.2% to $3.47 billion from $3.66 billion in the same period last year.

“The beginning of the year fell short of our expectations. Following a solid start to the quarter with positive low-single-digit comps through late March, sales deteriorated significantly in April due to macro headwinds related to the expiration of last year’s stimulus and an inflationary consumer environment, according to Kohl’s CEO Michelle Gass.

First-Quarter Sales at Kohl's Decline

“We remain dedicated to our long-term strategy and are pleased that our improved retail experience, which includes Sephora at Kohl’s stores, drove positive comparable store sales across these 200 sites for the quarter. We continue to anticipate that our company will strengthen as the year proceeds, with growth in the second half as a result of the rollout of 400 additional Sephora locations, expanded loyalty programmes, and additional retail investments.

Regarding our evaluation of strategic options, we continue to interact with a variety of interested parties. We have conveyed formally the particular procedures for the submission of actionable proposals due within the next few weeks. “We are happy with the amount of parties who understand the value of our business and plan as we complete our deep diligence phase,” said Gass.

Kohl’s Corp. joined the ranks of retailers announcing dismal results, as its shares fell another 7.3% in premarket trade on Thursday, following an 11% plunge on Wednesday due to market turbulence. Thursday’s trading price for the stock was $40.

The retailer reported Thursday that its first-quarter sales decreased, cutting the company’s sales and profitability forecast for 2022.

However, the firm stated that it remains committed to its long-term plan, which is centred on rolling out Sephora shops within its stores and continuing to build its reputation as a destination for casual and active clothing for the family and strong values. Additionally, Kohl’s continues to explore bids to acquire the company from retailers and private equity groups.

Comparable to the prior year’s first quarter, Kohl’s reported a net income of $14 million, or $0.11 per share, for the period ending April 30.

Net sales and comparable sales for the first quarter declined by 5.2% to $3.47 billion from $3.66 billion in the same period last year.

“The beginning of the year fell short of our expectations. Following a solid start to the quarter with positive low-single-digit comps through late March, sales deteriorated significantly in April due to macro headwinds related to the expiration of last year’s stimulus and an inflationary consumer environment, according to Kohl’s CEO Michelle Gass.

“We remain dedicated to our long-term strategy and are pleased that our improved retail experience, which includes Sephora at Kohl’s stores, drove positive comparable store sales across these 200 sites for the quarter. We continue to anticipate that our company will strengthen as the year proceeds, with growth in the second half as a result of the rollout of 400 additional Sephora locations, expanded loyalty programmes, and additional retail investments.

Regarding our evaluation of strategic options, we continue to interact with a variety of interested parties. We have conveyed formally the particular procedures for the submission of actionable proposals due within the next few weeks. “We are happy with the amount of parties who understand the value of our business and plan as we complete our deep diligence phase,” said Gass.

Kohl’s stated in a statement that its board is “thoroughly evaluating the company’s standalone strategic strategy versus prospective alternatives” and that its finance committee is “leading the ongoing evaluation of expressions of interest.” The board tasked Goldman Sachs with conducting a comprehensive process to investigate strategic alternatives, which has thus far involved over 25 parties.

Reported bidders include Acacia Research Corp., Leonard Green & Partners, Sycamore Partners, Hudson’s Bay Co., and Simon Property Group in conjunction with Brookfield.

Multiple bidders have been invited to a data room with over 550,000 pages and over 55,000 documents, in addition to talks with management. While preliminary, non-binding proposals have been received, the board has requested that final, fully-financed bids be presented within the next few weeks,” the company added.

According to one source, Kohl’s chairman of the board, Peter Boneparth, is opposed to completing a deal to sell the company, which has prompted industry suspicion that Kohl’s is currently leaning toward independence. A change in ownership would likely result in the formation of a new board and managerial changes as well.

Doug Howe, who has served as the off-mall retailer’s chief merchandising officer since 2018, and Greg Revelle, the company’s chief marketing officer, both announced their exits on Wednesday as a result of the low first quarter sales. Howe has already left, and Revelle will depart on 1 June.

However, Kohl’s has rejected the idea of sale leasebacks. Activist investors have pressured Kohl’s to increase shareholder value through a prospective sale of the firm or other measures, including sale leasebacks of properties.

Josh Phelix

A journalist and editor with a decade-long career in journalism and criticism,I'm a journalist who loves to write about Tech, Automobile,Entertainment,Sports and Finance things that are true. I love to tell stories that are meaningful and make you think.

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