The choosy US retail customer still doesn’t want what Kohl’s Corp. Is trying to sell.
The midmarket department-store chain slashed its guidance for the full year after reporting first-quarter results that wildly missed on just about every metric. Comparable sales, which measure the performance of stores open at least one year, fell 4.4% in the quarter ended May 4 — the ninth consecutive decline. Analysts had expected a 1.7% drop.
Although Kohl’s offered deep discounts in the period, the company said
sales of clearance items actually declined, leading to the miss on comparable sales. On the company’s website Thursday, it was hawking sales of as much as 85% off.
The stock tumbled as much as 27% in New York trading, the most on record. The shares had declined 5% this year through Wednesday, compared with a 9.7% gain for the Russell 1000 Index.
“Our customers continue to be pressured by a number of economic factors, including high interest rates and inflation,” Chief Executive Officer Tom Kingsbury said on a conference call. “While spending among our high-income customers has remained steady, our middle-income customer continues to be impacted.”
The Menomonee Falls, Wisconsin-based retail chain has been introducing tie-ups with other brands to bring customers in, most notably with cosmetics chain Sephora. Though Kohl’s cited strong growth in Sephora traffic, it doesn’t look to be translating into many sales outside the store-in-store locations.
The company, which brought on board member Kingsbury as CEO in February 2023 after a lengthy search, said the quarter’s results “did not meet our expectations and are not reflective of the direction we are heading with our strategic initiatives.”
Thursday’s retail results reinforce that inflation-weary consumers are seeking value, and being picky about what that means to them.
Foot Locker Inc. Soared as much as 32%, the most on record, after saying profit far exceeded analysts’ estimates. Still, CEO Mary Dillon struck a cautious note in an interview.
“There’s still pressure on the consumer for us — exposure to inflation, interest rates and reduced savings,” Dillon said. “But it’s discretionary for a reason. They decide where to spend it.”
Dollar General Inc., in the midst of turnaround efforts under two-time CEO Todd Vasos, said Thursday that gains in traffic and market share drove sales growth
, though shoppers are spending less per transaction on average. Consumable products are growing, but more discretionary items such as apparel, seasonal and home products are declining.
“They continue to be very value-oriented in their shopping behavior,” Vasos said of consumers on a conference call, adding that there’s higher demand for private-label products and items at or below $1.
Best Buy Co., the last big US electronics chain, is all about discretionary items — and comparable sales slumped 6.1% in its most recent quarter, missing estimates. Still, the company outperformed on profit thanks to membership and service offerings.
“Customers remain very deal-focused and attracted to more predictable sales moments,” CEO Corie Barry said on a call with analysts. The broader environment was more discount-heavy than expected, she said, though it varied by categories. Appliances were more promotional during the first quarter.
Discount chain Burlington Stores Inc. Surged as much as 21% in New York trading, the most since November, after reporting comparable sales and earnings that topped estimates. The company also raised its full-year guidance. “The quarter got off to a slow start in February, likely due to disruptive weather and delayed tax refunds, but then our sales trend picked up,” CEO Michael O’Sullivan said in a statement.
— With assistance from Jaewon Kang and Kim Bhasin