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Bear of the Day: Kohl's (KSS)

Kohl's KSS is a U.S.-based department store chain that operates specialty department stores and an e-commerce site. The company offers moderately priced apparel, footwear, and accessories for women, men, and children.

Analysts have taken a bearish stance on the company’s earnings outlook, landing it into a Zacks Rank #5 (Strong Sell).

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

In addition, the company is in the Zacks Retail – Regional Department Stores industry, which is currently ranked in the bottom 18% of all Zacks industries. Let’s take a closer look at the company.

 

Kohl’s

Kohl’s has struggled to exceed top and bottom line expectations as of late, falling short of the Zacks Consensus EPS estimate by an average of 123% across its last four releases. Just in its latest print, Kohl’s fell short of our consensus EPS estimate by 700%, with sales of $3.8 billion also 5% lower than expected.

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Shares faced pressure following the release, with KSS shares down nearly 20% overall in 2024.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Tom Kingsbury, CEO, on the results, “We continue to have high conviction in our strategy and believe that our key growth initiatives, including Sephora, home decor, gifting, impulse, and our upcoming partnership with Babies “R” Us, will contribute more meaningfully going forward. That said, we recognize we have more work to do in areas of our business. We are approaching our financial outlook for the year more conservatively given the first quarter underperformance and the ongoing uncertainty in the consumer environment.”

Nonetheless, the company remains positive, looking to strengthen its balance sheet via debt reduction throughout 2024.

Bottom Line

Negative earnings estimate revisions from analysts stemming from weak quarterly results paint a challenging picture for the company’s shares in the near term.

Kohl’s KSS is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.

For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.

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Zacks Investment Research