(Bloomberg) -- Kohl’s Corp. shares dropped after it reported a seventh-straight drop in comparable sales, pointing to an ongoing decline in foot traffic and a broader shift away from consumer spending on discretionary goods like apparel.
While Kohl’s has been successful in clearing excess inventory and cutting costs this year, it’s still struggling to generate sales growth. A partnership with cosmetics chain Sephora has helped drive foot traffic to stores, but not enough to offset broader declines in spending on goods in favor of travel and entertainment.
Same-store sales in the third quarter fell 5.5%, worse than the average analyst estimate of a 3.45% decline. Adjusted earnings, meanwhile, were 53 cents a share, an improvement from the prior quarter.
The shares were down 11% in New York trading at 9:48 a.m., the biggest decline since July 2022. Kohl’s stock was down 1.5% for the year through Monday’s close while the S&P SmallCap 600 Index gained 1.2%.
The pandemic shopping boom that bolstered Kohl’s sales in 2021 is coming to a close amid student-loan repayments and higher interest rates, which will likely continue to pressure results in the coming quarters. Still, for the full year, Kohl’s now sees earnings of $2.30 to $2.70 a share, maintaining the top end of the range and raising the lower end from $2.10.
As with other US retailers, Kohl’s results suffered last year due to bloated inventories that led to increased discounting. In the third quarter, inventories were down 13% from a year ago and gross margin came in slightly better than expected.
“Our strategies to reposition Kohl’s for improved sales and earnings performance remain in the early stages,” Chief Executive Officer Tom Kingsbury said in a statement.
Kohl’s shares had edged down Monday on the departure of Chief Operating Officer Dave Alves, who had been in his position only since April. Kingsbury said on an earnings call Tuesday that the position won’t be filled.
(Updates with shares in fourth paragraph, COO departure in eighth paragraph.)
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