By Savyata Mishra
(Reuters) – Kohl's on Tuesday forecast a bigger drop in annual sales than previously expected, a sign the department store chain is struggling to attract shoppers as it navigates a CEO change ahead of a packed holiday shopping season. of offers.
Shares of the Menomonee Falls, Wisconsin-based company fell 18% before the bell as it also reported worse-than-expected third-quarter results.
The weak forecast underscores an uncertain holiday season for the retail sector, which could tilt in favor of competitors such as Walmart (NYSE:) and amazon.com (NASDAQ:), as customers increasingly focus on bargains.
Kohl's (NYSE:), whose stock value has fallen 36% this year amid its turnaround efforts, announced the departure of CEO Tom Kingsbury a day earlier. He will be succeeded by Ashley Buchanan, a retail veteran and head of Michaels Companies (NASDAQ:), in January.
The company now enters the critical, shorter holiday period, in which retailers offer aggressive discounts to entice consumer spending early in the season.
“Our third quarter results fell short of our expectations as sales remained weak in our apparel and footwear businesses,” CEO Kingsbury said.
Kohl's launched a three-day Black Friday early access event from November 8 to 10 and will be offering Black Friday deals from November 24 to 29.
Strong beauty sales stemming from the company's collaboration with beauty retailer Sephora are also starting to fade as Kohl's finishes opening 140 small Sephora stores this year.
“Revenue really struggled when (the company) wrapped up the (Sephora) launch. Basically, the low-hanging fruit seems to have disappeared,” said M science analyst Matthew Jacob.
Kohl's comparable sales fell 9.3% in the quarter ended Nov. 2, its 11th consecutive quarter of decline. Analysts on average expected a drop of 5.1%, according to data compiled by LSEG.
It earned 20 cents per share, below an estimate of 28 cents.
The company now expects full-year net sales to fall between 7% and 8%, compared to its previous forecast of a decline of between 4% and 6%.
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