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Kohl’s Reports Mixed Earnings Amidst Challenging Outlook
Kohl’s recently announced its earnings and revenue results for the fiscal fourth quarter, exceeding market expectations in these areas. However, the company’s stock saw a significant decline of over 24% on Tuesday following the release of a grim forecast for the upcoming fiscal year.
For the fiscal year 2025, Kohl’s projects a revenue decline of between 5% and 7%, contrasting sharply with Wall Street’s expectations of only a 1.6% drop. Additionally, the retailer anticipates comparable sales to decrease by 4% to 6%, while analysts had predicted a more modest decline of 0.9%. Earnings per share (EPS) are estimated to fall between 10 cents and 60 cents, significantly lower than the average Wall Street estimate of $1.23.
During the earnings call, CEO Ashley Buchanan acknowledged the company’s struggles over recent years, attributing them to an overemphasis on expanding into new product categories at the expense of core offerings such as fine jewelry and proprietary brands. “A lot of the issues were probably self-inflicted over many years of decisions,” Buchanan stated, noting that customer feedback indicated a strong affinity for the brand despite recent missteps.
Buchanan, who took over as CEO in January, explained that an excessive number of brand exclusions from promotional coupons also contributed to customer confusion and frustration. This policy, which peaked in 2024, is currently under reconsideration.
Performance Metrics
In terms of performance against analyst expectations, Kohl’s reported:
- Earnings per share: 95 cents adjusted vs. 73 cents expected
- Revenue: $5.18 billion vs. $5.15 billion expected
Kohl’s has faced considerable turmoil in recent months, having appointed Buchanan as CEO in November 2023 to succeed Tom Kingsbury, who led the company for two years. Over the past year, Kohl’s stock has plummeted by more than 65%.
In January, the company revealed plans to cut nearly 10% of its corporate workforce and close 27 underperforming stores by April. Despite these challenges, CFO Jill Timm remarked that most Kohl’s locations remain “incredibly healthy” and profitable, with upcoming lease renewals providing opportunities for strategic reassessment.
The impact of inflation is also on the retailer’s radar, as lower-income shoppers are increasingly seeking value-conscious options. Buchanan noted that the economic environment is influencing consumer behavior, mirroring trends seen across the retail sector.
Kohl’s is not alone in bracing for a turbulent outlook in 2025, following similar sentiments expressed earlier by Dick’s Sporting Goods. Concerns surrounding falling consumer confidence, trade tariffs, and weak job growth contribute to recession fears.
In its fourth quarter, Kohl’s net sales totaled $5.18 billion, a decline from $5.71 billion in the same quarter of 2023. The full-year sales for 2024 were reported at $15.39 billion, down from $16.59 billion in 2023, although it’s important to note that fiscal 2023 benefitted from an additional week, adding approximately $164 million in net sales.
Kohl’s comparable sales dropped 6.7% year-on-year, slightly better than Wall Street’s forecast of a 6.8% decline. The company reported a net income of $48 million, or 43 cents per share, compared to $186 million, or $1.67 per share, from the prior year’s fourth quarter. Adjusted for certain costs, the reported earnings per share were 95 cents.
Despite robust store sales, Timm indicated that digital sales had struggled, particularly in the traditional home category. On a positive note, beauty sales increased by 13%, largely thanks to the success of the Sephora partnership, which has significantly bolstered revenue in that segment.
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