Kohl’s (NYSE:KSS) revealed a 23% drop in first-quarter profit and virtually flat year-over-year sales at its older stores.
The moderately-priced department-store chain also gave a tepid forecast for the current quarter despite claiming its inventory well prepares it for the key back-to-school season that it hopes will “greatly improve” fall-season sales.
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Menomonee Falls, Wis.-based Kohl’s predicts earnings for the fiscal second quarter ending in July in the range of 96 cents and $1.02 a share. The guidance, which is below current analyst estimates of $1.13 a share, hinges on sales growth of 2% to 3%.
For the full year, Kohl’s backed its forecast of $4.75 a share, a penny ahead of the Street’s view.
The retail giant's shares were down nearly 3% Thursday.
Kohl’s reported net income of $154 million, or 63 cents a share, in its latest quarter, compared with a year-earlier $201 million, or 69 cents.
The results were ahead of average analyst estimates of 61 cents in a Thomson Reuters poll.
Revenue for the three months ended April 28 was $4.2 billion, up 1.9% from $4.16 billion a year ago, narrowly below the Street’s view of $4.25 billion. The retailer’s key revenue metric, comparable sales, or those at stores open longer than a year, were virtually flat.
“Our first quarter results reflect the implementation of our strategy to initiate lower pricing in order to provide greater value to our customers,” Kohl’s CEO Kevin Mansell said in a statement.
While the decrease in prices significantly lowered gross margins, he said, tighter expenses helped offset softer revenue.