Kohl’s investors and management didn’t really enjoy the holiday season. Since mid-November, the stock lost more than 20%, with the latest drop on January 03 causing the stock to hit a 4-month low.
Fundamental analysis: Amazon to the rescue?
In 2017, it was announced that Amazon and Kohl’s have entered into a partnership to allow Amazon products to be offered in more than 2000 Kohl’s stores. Furthermore, the agreement was further extended in 2019 to allow Amazon customers to return items at Kohl’s stores. Hence, the retailer would benefit from more customers visiting their shops.
However, the Amazon partnership is not doing the trick for the embattled department-store chain Kohl’s. Judging by the company’s latest financial results, it will take more than an Amazon partnership to generate higher income from sales.
In November, the company was optimistic that the upcoming holiday season may come to the rescue.
“The holiday season is when Kohl’s is at its best. And this year will be no different,” Kohl’s Chief Executive Michelle Gass said.
And once again, Kohl’s has failed to deliver. Shares of the company tanked on dismal holiday performance.
Kohl’s reported that same-store sales declined 0.2% during November and December. The retailer blamed its core women’s apparel business for the poor performance in the previous two months.
As expected, analysts weren’t thrilled with Kohl’s latest results.
“It’s going to be hard to find a positive development out of today’s holiday update from [Kohl’s],” Gordon Haskett analyst Chuck Grom said.
One of the most recognized market analysts, Jim Cramer, says that the latest data left him “speechless”.
“Kohl’s is just roadkill. I’m speechless … I’m as quiet as the registers at Kohl’s,” commented Cramer. “It feels like people returned things to Amazon and then ran out of the store,”
Following the announcement, the stock opened 8% lower before it ultimately closed the week at $46.36, down nearly 6% since the beginning of the week.
Technical analysis: Bearishness prevails
The latest results are likely to continue applying pressure on Kohl’s stock. The company now expects to hit a “low end” of the projected earnings range of $4.75 to $4.95 per share.
On January 09, the stock hit a 4-month low of $44.61. It now comfortably trades below all major technical indicators on the daily chart (see below).
Shares of the company trade below the ascending trend line (the red line) as the bears now target the major multi-year trend line (the purple line). If the price moves towards this zone and tests the major supporting trend line, as the chart suggests, it would translate into an additional 17% drop for the stock and a new multi-year low for Kohl’s.
Kohl’s latest sales data disappointed once again after the US-based retailer failed to capitalize on the extended partnership with Amazon. Technically, the stock looks fairly bearish as the bears target levels below $40.