Shares of Kohl’s (KSS) - Get Kohl's Corporation Report fell more than 16% on Tuesday despite the department store chain posting a narrower-than-expected second-quarter loss as consumers delved back in to buying goods, particularly online.
Kohl’s stock was down 16.28% at $19.64 after posting an adjusted loss of $39 million, or 25 cents a share vs. adjusted net income of $247 million, or $1.55 a share, a year earlier. Analysts polled by FactSet had been expecting a loss of 88 cents a share.
Sales came in at $3.4 billion, down 23% from the $4.4 billion in sales it brought in a year ago though better than the $3.1 billion expected by analysts polled by FactSet. Digital sales increased 58%, the company said.
Kohl’s CEO Michelle Gass said in a statement that the department store chain “made significant progress in rebuilding our business” in the second quarter, noting the company reopened all of its stores, accelerated digital growth, “and showed great discipline in managing inventory and expenses meaningfully lower.”
“In doing so, we generated positive operating cash flow and further enhanced our financial position,” she said.
Retailers large and small continue to suffer through the coronavirus pandemic that has not only upended physical business but also slammed the economy and consumer spending, which accounts for the bulk of U.S. economic activity. Retail sales in July rang in at a moderate 1.2% after rebounding 8.4% in June.
That followed a 17.7% surge in May that was a boomerang rebound from a 14.7% drop in April.
On the cost-cutting side, Kohl’s said it reduced its inventory levels by 26% in the second quarter, in addition to suspending its dividend payout and share buyback program. On the liquidity front, Kohl’s said it “replaced, securitized, and upsized” its $1.5 billion revolving credit, noting it now has $2.4 billion in cash available.
While the company did not provide forward guidance, it did say it expects to see customers begin their holiday shopping earlier this year, which should help bolster sales in the third and fourth quarters, though it still expects Covid-19 “to continue to impact our business.”