The Kohl’s (KSS) earnings day clunkers continue.
Kohl’s stock was shredded to the tune of 19% Tuesday afternoon as those on the Street banking big on a new in-store Amazon returns policy juicing sales were sorely letdown, yet again. The company badly whiffed on earnings, with third quarter adjusted results tallying 74 cents a share versus the 86 cents a share analysts expected. Same-store sales rose a meager 0.4%, below projections of 0.8%.
To add insult to injury, Kohl’s slashed its full-year earnings outlook to $4.75 to $4.95 a share. The extent of the cut is bizarre and definitely shocked the sell-side — just 90 days ago Kohl’s reiterated an earnings outlook of $5.15 to $5.45 a share.
“3Q sales softer than expected while gross margin percentage deteriorated further which is never a good combination. We see competitive pressures rising and other retailers taking share (e.g. TGT). KSS choosing to increase investments depresses EPS and may not provide a visible ROI for some time, and finally the Amazon partnership doesn't appear to be providing meaningful benefits yet. Our thesis is being tested and we must adopt a more conservative EPS view & valuation approach,” said Jefferies analyst Randal Konik.
This writer isn’t surprised by Kohl’s latest lackluster earnings day showing. Back in May, we cast a skeptical eye on the potential sales lift to Kohl’s from the Amazon return policy and the overall economics of it.
But what we perhaps underestimated at the time is Kohl’s sales and profit margin challenges stemming from heightened competition online, off-price retailers such as TJ Maxx and hundreds of remodeled Macy’s and Target stores.
So we asked Twitter about their interactions with Kohl’s of late. The responses underscore the pressures on Kohl’s business headed into the key holiday shopping season and into 2020.
Let's discuss here. When was the last time you went to Kohl's? Do you desire to visit Kohl's on the weekend? Does Kohl's excite you?— Brian Sozzi (@BrianSozzi) November 19, 2019
Stock chart post a major earnings warning from Kohl's this morning via @YahooFinance $KSS pic.twitter.com/Zh9xIiXrhc
My wife visited $KSS store a few weeks ago and she came home very very disappointed and just expressed negative feelings regarding pricing of the products as very expensive. I mean everyone is price sensitive to a point but in this case I quickly bought some puts on the stock.— Arjun Nath (@ArjunNath6) November 19, 2019
Last time I went was to drop off an Amazon return. Didn't buy anything despite the coupon they gave me.— Token White Dude (@tokenwhitedude) November 19, 2019
It has been almost 10 years. No. No.— vtwinrider2 (@vtwinrider2) November 19, 2019
one of my favorite black Friday places . . . and that's about it.— B Chells (@bchells22) November 19, 2019
Then two days later I think about the time I saved not standing in line waiting for a price check, someone who can't properly run their credit card or some other waste of perfectly good time....life is short ya know— Robert Barker (@NotTheRealBob) November 19, 2019
Like most retail I glance over think about something I need then order it off Amazon when I get home— Robert Barker (@NotTheRealBob) November 19, 2019
The Amazon return program has definitely led me in there in the last few months. Bought something of garbage quality off Amazon, returned it at Kohls and bought a much better version.— Dave (@DScoul) November 19, 2019
Kohl's is a great place to buy quality gym clothes, underwear and bras on clearance. I spend the Kohl's cash on those things too, or half price candles. If you return Amazon stuff there, customer service gives you a 25% off coupon for Kohl's. Never understood how they make money.— Bus Rules🚍 (@SCJ_BusRules) November 19, 2019
I buy most of my bathroom stuff there and shorts . I like that they carry the Izod brand.— Sir_Adam DeMouy (@AdamDeMouy) November 19, 2019
I haven’t been inside Kohl’s for many years.— Burma Powell ❌ (@BurmaPowell) November 19, 2019
Actually, my wife goes often. Got a great deal on some pots and pans this week.— Daniel Keller, CPA (@Budget_Addict) November 19, 2019
I like a good bargain. Kohl’s receipt: total spent $35.67, total saved, $68.41.— wisprjet (@wisprjet) November 19, 2019
Right. Kohls for the basics. I was introduced to Kohl's when I tried their "free returns to Amazon" program. It was just easier to bring my post-holiday Amazon returns to Kohls, let them package and send, and the coupon was a surprise. I'll do it again this season.— Trayce Zimmermann (@TrayceZPR) November 19, 2019
Kohl’s is great for quality kids brands like Carters at great prices. Shopping there is like a game show. You need to get the right coupon and kohl’s cash mix.— Bus Rules🚍 (@SCJ_BusRules) November 19, 2019