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Kohl’s shares tanked more than 20% as the retailer reported plummeting sales and its chief executive abruptly quit — just days before the crucial Black Friday kickoff to the holiday season.
The Menomonee Falls, Wisconsin-based department-store chain on Tuesday reported a same-store sales decline of 9.3% – its eleventh quarterly same-store sales decline in a row.
The retailer also lowered its annual forecast for the third quarter in a row. Kohl’s now expects full-year net sales to decline between 7% and 8%, compared to a previous forecast between a 4% to 6% decline.
On Monday, Kohl’s announced CEO Tom Kingsbury will step down from the helm after less than two years in the role – an abrupt departure less than a week before the major sales holiday that will likely further cripple investor confidence.
The company appointed Michaels CEO and former Walmart executive Ashley Buchanan to step into the role in January.
“While we heard from many retailers last week about quarter to date accelerations, we don’t think an abrupt CEO departure is a strong sign of confidence the night before earnings and four days before Black Friday,” Evercore ISI analyst Michael Binetti said.
The announcement, which came the day before the company’s earnings report, “casts a meaningful shadow” on Kohl’s, Binetti said.
Under Kingsbury, Kohl’s had focused on its home decor, gifts and kid’s clothing categories as cash-strapped customers steered clear of pricey clothing and footwear purchases at department stores.
Customer visits to Kohl’s plunged 6.2% on average in the third quarter, compared to a 3% fall in the previous three months, according to Placer.ai data.
As the holiday season swiftly approaches, investors worry that inflation-battered consumers who are hungry for deals may favor discount chains like Walmart over traditional department stores like Kohl’s and Macy’s, which have struggled to hold onto customers amid price hikes.
Kohl’s shares are down 47.9% so far this year, while Macy’s shares have dropped 18.7% in the same period.
On Monday, Kohl’s rival Macy’s delayed its earnings release after a rogue employee hid as much as $154 million in expenses.
The retailer released preliminary third quarter results that showed a sales decline of 2.4% to $4.7 billion and a same-store sales drop of 1.3%.
With Post wires
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