Kohl’s Stock Slides On Weak Q3, Lowered Outlook: Retail Pins Hopes On CEO Change

Shares of omni-channel retailer Kohl’s ($KSS) tumbled over 16% on Tuesday after the firm’s third-quarter earnings fell short of Wall Street estimates, hurt by weak sales in apparel and footwear businesses.

Net sales decreased 8.8% year-over-year (YoY) to $3.5 billion, missing an analyst estimate of $3.65 billion. Earnings per share came in at $0.20 versus an estimate of $0.31. Net income fell 63% YoY to $22 million during the quarter.

CEO Tom Kingsbury said although the firm had a strong collective performance across its key growth areas, including Sephora, home decor, gifting, and impulse, and also benefited from the opening of Babies “R” Us shops in 200 stores, these were unable to offset the declines in the core business.

“We are not satisfied with our performance in 2024 and are taking aggressive action to reverse the sales declines. We must execute at a higher level and ensure we are putting the customer first in everything we do. We are approaching our financial outlook for the year more conservatively given the third quarter underperformance and our expectation for a highly competitive holiday season,” Kingsbury continued.

The company lowered its guidance for the full-year, now expecting net sales to decline 7% to 8% compared to an earlier guidance of a decrease of 4% to 6%. Comparable sales are expected to decrease 6%-7% versus an earlier forecast of 3%-5%.

Kohl’s also brought down its earnings expectations and now see diluted EPS in the range of $1.20 to $1.50 compared to a previous forecast of $1.75 to $2.25.

Despite the disappointing earnings and guidance, retail sentiment on Stocktwits jumped into the ‘extremely bullish’ territory (93/100), accompanied by significant retail chatter.

Kohl’s Sentiment Meter and Message Volume as of 1:16 p.m. ET on Nov. 26, 2024 | Source: Stocktwits

The upbeat retail sentiment follows the company announcing its leadership transition. CEO Tom Kingsbury will be stepping down on Jan. 15, with retail veteran Ashley Buchanan taking over the firm’s reins.

Kingsbury will stay on in an advisory role to the new chief executive and will retain his position on the board through his retirement in May 2025, after which the size of the board will be reduced by one.

This is reportedly the firm’s third CEO since 2018. Buchanan has been the CEO and President of Michaels Companies since 2020 and prior to that, has held various executive roles at Walmart, Sam's Club, Dell and Accenture.

Meanwhile, shares of Kohl’s have lost over 45% on a year-to-date basis.

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