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Twitter users explain why Kohl's stock just got obliterated after reporting earnings

Brian Sozzi
Editor-at-Large

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.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

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