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Kohls (KSS) Stock Dives on Q1 Earnings Miss, What’s Next?

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Updated 19 May 2022

Key points:

  • KSS shared drop 6% on poor Q1, following a string of other retail giants
  • Logistical issues, staffing expenses and increasing costs weighed on bottom line growth
  • Kohls lowered its FY guidance to EPS of between $6.45 and $6.85, down from over 7$

If you’ve been tuned in to the struggling environment for retailers, you’ll be aware that high-street giants are suffering greatly under macro headwinds, including supply chain limitations, inventory issues, inflation and all amongst a backdrop of last year’s unprecedented stimulus spending. Not an ideal landscape. With Home Depot being the only retailer to beat analyst expectations, Kohls (NYSE: KSS) followed in the path of Walmart, Target and Lowes. 

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The company repeated the tones of its competitors, citing logistical issues and staffing expenses eating into profits, weighed down further by 40-year high inflation; meaning consumers are starting to adjust spending habits to cope with tightening budgets. 

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Looking at the financials, it's no surprise that bottom line stagnancy is the bearish focus. The company recorded first quarter revenue of $0.11, wildy short of the $0.70 expected. On the bottom line, the company posted revenue of $3.72B against the consensus of $3.68B. Clearly, spending habits remain strong, but increasing operating and logistical costs, as well as staffing issues weighs on bottom line growth. On the disheartening numbers, Kohls followed by lowering its FY 2022 fiscal guidance, expecting EPS of between $6.45 and $6.85, down from between $7.00 and $7.50. 

The poor results come as a backdrop to the highly anticipated buyout that investors have been paying close attention to. With suspicions that CEO Michelle Gass isn’t doing enough for the company, activist hedge fund Macellum Advisors have been pushing the company to find a new owner since early this year. The company expects fully-financed bids to follow in the next week or so – investors should pay close attention. KSS shares are currently trading at a premarket loss of 6%, following yesterday's loss off 11%.