Kohl’s stock (NYSE: KSS) has seen a significant decline, currently trading at $22 per share, down 65% from its pre-inflation shock high of $64 in May 2021. The department store has been struggling due to shifting consumer buying habits away from department stores and faces strong online competition. Kohl’s first-quarter revenues dropped 5% year-over-year to $3.2 billion, with earnings per share also falling to a loss of $0.24 per share from a profit of $0.13 per share a year ago. This lackluster performance was driven by lower comparable sales growth of -4.4%.
Looking ahead, Kohl’s downgraded its sales forecast, expecting a decline of 2% to 4% through the end of 2024 compared to its previous forecast of -1% to 1% growth. The company also lowered its earnings guidance to between $1.25 and $1.85 per share, down from the previous forecast of $2.10-$2.70. KSS stock is down almost 22% year-to-date, while its rival Macy’s stock is down 6% since the beginning of the year. Kohl’s has underperformed the broader market in each of the last three years, with returns of 21% in 2021, -49% in 2022, and 14% in 2023.
In a comparison of KSS stock performance during the current inflation shock of 2022 and the 2007/2008 financial crisis, it is evident that the company has struggled to recover to previous levels. Kohl’s stock fell from nearly $58 in October 2007 to around $35 in March 2009 during the 2007/2008 crisis, losing almost 39% of its pre-crisis value. The stock market bottomed out in March 2009, with the S&P 500 rallying 48% between March 2009 and January 2010, while KSS stock rose roughly 53% during the same period.
Kohl’s revenues have declined from around $19.4 billion in 2021 to $17.5 billion in 2023, with earnings per share also decreasing. The company faces ongoing challenges in a difficult operating environment affected by inflation and consumer spending constraints. Despite the current uncertain macroeconomic environment, there is potential for Kohl’s stock to see strong gains once fears of recession are alleviated, according to analysis. However, the pressure on the company’s balance sheet remains a significant risk factor to achieving those gains.
With the Federal Reserve’s efforts to control inflation rates and market sentiments improving, Kohl’s stock could potentially experience a turnaround. Despite the challenges it currently faces, the company could see substantial gains if it can stabilize and recover in the coming months. It will be important to monitor how Kohl’s peers are performing and how the company compares to them in order to gauge its potential for recovery and growth in the future.
