Kohl's Reports First Drop in Net Sales in Six Quarters
Department store operator Kohl's reported a surprise drop in comparable sales and the first drop in net sales in six quarters as unseasonably cool weather hurt sales of spring wear amid a slump in demand for apparel.
Shares of the company, which is known to be the most weather-sensitive among department store operators, were down 7 percent at $36 in premarket trading on Thursday. The stock was set to open at a more than 7-year low.
Sales at Kohl's stores open at least a year fell 3.9 percent in the first quarter. Analysts polled by research firm Consensus Metrix had expected sales to grow 0.4 percent.
Kohl's had in February said it was finding it difficult to get rid of cold weather apparel from an unseasonably warm winter, raising concerns of margin pressure in its first quarter.
Adding to that, cool weather in late March and early April, when apparel retailers usually sell spring-wear collections, led to slower traffic at apparel stores.
Larger rival Macy's on Wednesday reported a much bigger-than-expected drop in quarterly sales and slashed its full-year forecast.
Sales at department store chains have been hit over the past year as consumers cut back on apparel shopping, choosing instead to spend on smartphones and electronics, and on experiences such as dining out and travel, and invest in assets like vehicles and homes.
Kohl's net income fell to $17 million, or 9 cents per share, in the first quarter ended April 30, from $127 million, or 63 cents per share, a year earlier.
The company recorded $64 million in impairments, store closings and other costs.
Excluding items, the company earned 31 cents per share, missing the average analyst estimate of 37 cents, according to Thomson Reuters I/B/E/S.
Net sales fell 3.7 percent to $3.97 billion, missing the average analyst estimate of $4.13 billion.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Sriraj Kalluvila)