Kohl's Corp. (KSS) - Get Report posted weaker-than-expected third quarter earnings Tuesday, and lowered its full-year profit guidance, as the struggling retailer continues to add bottom-line gains from its turnaround plans.
Kohl's said adjusted earnings for the three months ending on November 2 came in at 74 cents per share, down 24.4% from the same period last year and well shy of the Street consensus forecast of 86 cents per share. Group revenues, Kohl's said, rose 5.8% from the same period last year to $4.625 billion, topping analysts' estimates of a $4.4 billion tally.
Looking into the final months of the year, Kohl's said it sees fiscal 2019 earnings of between $4.75 and $4.95 per share, down from its prior estimate of $5.15 to $5.40 per share,
"We are pleased to report that our business returned to growth during the third quarter, with a comparable sales increase of 0.4%," said CEO Michelle Gass. "The quarter started off positive in August with another successful back-to-school season and ended strong in October."
"We enter the holiday period with momentum and are strategically increasing our investments to take advantage of the unique opportunity to fuel growth and customer acquisition," she added. "We believe that investing in the short-term will support our strategies to drive profitable growth over the long-term."
Kohl's shares were marked 17.12% lower in the opening minutes of trading following the earnings release to change hands at 48.40 per share, a move that would extend the stock's year-to-date decline past 27%.
Kohl's third quarter update marks a stark contrast to retailing rival J.C. Penney (JCP) - Get Report , which posted a narrower-than-expected third quarter loss last week, while boosting its full-year profit guidance amid "significant progress" in its own year-long turnaround.
Still, J.C. Penney echoed the near-term weakness expressed by Kohl's with its forecast of a 5% to 6% slide in same-store sales over the final three months of the year.
Rival retailers were under pressure following the Kohl's release, with Macy's (M) - Get Report falling 6.55%, Nordstrom (JWN) - Get Report sliding 4.9% and L Brands (LB) - Get Report marked 1.85% in the red at $17.54 each.
U.S. retail sales rose just 0.3% last month, but missed economists' forecasts when automobile sales were stripped out and declines in clothing, furniture, electronics, and building materials were computed. Previous readings for August and September were revised to the downside, which, when set against flat wage growth and looming tariffs on the next round of China-made consumer goods set to kick-in on December 15, could bode poorly for the coming Christmas period.
"The 'control' measure (of U.S. retail sales data) which drives the non-durable goods component of overall consumers' spending, is on course to rise at an annualized rate of less than 3% in the fourth quarter, following a solid 6.3% increase in the third," said Ian Shepherdson of Pantheon Macroeconomics.
"This does not guarantee a sluggish performance from aggregate real consumption, because
it tells us nothing about spending on discretionary services or vehicles," he added. "The latter was stronger than we expected in October, but the big picture is unfavorable as financing conditions tighten."