Shares drop by 16% as Kohl’s reports worse than expected results for the third quarter

on Nov 19, 2019
Updated: Mar 11, 2020
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  • Kohl's missed the sales and earnings target in the third quarter of 2019.
  • Share prices were reported to have dropped by 16% following the report.
  • Other retail stores like Macy's and J.C Penney are also performing poorly in the stock market.
  • Kohl's reduced its earnings/revenue estimate for fiscal year 2019.

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The American department store retail chain, Kohl’s, announced its earnings report for the third quarter on Tuesday. Having missed the sales and earnings target for Q3, the share prices were reported to have dropped by 16%.

Officials from Kohl’s have highlighted the rising competition and the delay in the fall season to be the reasons why the retailer failed to hit the earnings and sales targets. It was further added that women’s business has performed the poorest in the third quarter. Following the Q3 earnings report, Kohl’s has also lowered the estimate for the rest of the year.

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Stock Performance For the Year 2019

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Kohl’s is widely known for its reputation as a cyclical stock that is sensitive to macroeconomic affairs. With the ongoing U.S – China trade war, the stock has been under pressure through much of 2019. The stock traded at $67.80 at the start of the year. Following the year-to-date high of $75.48, Kohl’s lost significantly and printed a yearly low of around $45. Following the earnings report, the stock lost around 16% and is currently trading at $47.84.

According to Refinitiv, the earnings per share (EPS) for Kohl’s was estimated at 86 cents. The retailer, however, printed a significantly lower EPS of 74 cents per share (adjusted) in the third quarter. Refinitiv had expected Kohl’s to generate $4.40 billion in revenue in Q3 of 2019. Having missed the target, the American department store noted a lower than expected $4.36 billion in revenue instead. Same-store sales were forecasted to grow at 0.8% in the third quarter while the actual figure came out to be only half of that.

Other Retails Chains Are Also Performing Poorly In The Stock Market

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Nike and other relevant brands have started to invest more on their own websites and stores to market their products instead of relying on middlemen to do the job for them. According to the experts, this might also have contributed to reduced sales and earnings for Kohl’s. The analysts of the stock market have also added that Kohl’s is not the only store to have performed poorly in the stock market. Other retail chains like J.C Penney and Macy’s were also reported trading 7% and 6% lower respectively at the start of the day.

Kohl’s estimate for the fiscal year 2019 is currently at $4.75 to $4.95 per share (adjusted). The retailer had previously forecasted $5.15 to $5.45 of EPS for 2019. As of November 2nd, the net income for Kohl’s has sharply dropped to $123 million as compared to $161 million that was reported last year.

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