Shares in Kohl's plunged more than 20% as the company reported plummeting sales and its chief executive abruptly resigned just days before the start of the crucial Black Friday holiday season.
The Menomonee Falls, Wis.-based department store chain reported Tuesday that same-store sales fell 9.3%, marking the 11th consecutive decline in same-store sales for the quarter.
The company also lowered its full-year forecast for the third consecutive quarter. Kohl's now expects full-year net sales to decline 7% to 8%, compared with previous expectations of a 4% to 6% decline.
Coles CEO Tom Kingsbury will step down from his role after less than two years in the role, it was announced on Monday, in a sudden announcement less than a week before a major sales holiday. 's resignation is likely to further erode investor confidence.
The company appointed Michaels CEO and former Walmart executive Ashley Buchanan to the role in January.
“We heard from a number of retailers last week about quarter-to-date acceleration, but the abrupt resignation of the CEO on the eve of earnings and four days before Black Friday shows confidence,” said Evercore ISI analyst Michael Binetti. I don't think it's a strong sign.”
The announcement, made the day before the company's earnings report, “casts a significant shadow” on Kohl's, Binetti said.
Kingsbury's Kohl's focused on home décor, gift items and children's clothing categories as cash-strapped customers shied away from purchasing expensive clothing and shoes at department stores.
Customer visits to Kohl's fell an average of 6.2% in the third quarter, compared to a 3% decline in the previous three months, according to data from Placer.ai.
As the holiday season rapidly approaches, investors are betting that inflation-stricken consumers hungry for sale items will outpace traditional department stores like Kohl's and Macy's, which are struggling to retain customers amid rising prices. I'm also concerned that they may prefer discount chains like Wal-Mart.
Kohl's stock is down 47.9% since the beginning of the year, and Macy's stock is down 18.7% over the same period.
On Monday, Mr. Kohl's rival Macy's delayed its earnings report after a fraudulent employee hid $154 million in expenses.
The company announced preliminary results for the third quarter, with sales down 2.4% to $4.7 billion and same-store sales down 1.3%.
with post wire
