Taking an unfortunate turn for the worse, Kohl’s stock showed weak results on Tuesday, falling 17% in premarket trading after the company released its quarterly results that fell considerably below expectations. Among the many reasons for Kohl’s stock tumbling, CEO Tom Kingsbury revealed that he would be stepping down from his position after only two years spent at the helm.
Kohl’s witnessed a sales decline in 2024, with the numbers falling 8% year-over-year. The company only brought in $3.5 billion for the quarter, and its comparable sales were down 9.3%.
Kohl’s Stock Falls After Weak Results in the Company’s Third Quarter Report
Kohl’s financial struggles are reflected in its third-quarter earnings report, where its net revenue fell 9% year-over-year to $3.51 billion, with profits of $22 million (22 cents per share). This was below the $3.85 billion revenue expected by analysts, with a net income of $29.8 million. The profits stood at $59 million, or 53 cents a share, during the same period a year ago.
Net sales fell by 8.7% to $3.51 billion, which was below the consensus of $3.51 billion and was the third consecutive year the company missed expectations every quarter. Kohl’s pointed out that its fiscal year in 2024 had 52 weeks while fiscal 2023 had 53 weeks, which could indicate that the one additional week of sales might have made a difference last year. However, that has not been a satisfactory explanation of Kohl’s financial struggles.
Kohl’s stock’s weak results are particularly noteworthy as the shares are down by over 50% since the year began. According to FastCompany, the company’s shares haven’t fallen this low since the late 1990s.
Kohl’s Lowers its Predictions for Net Sales for the Year
Kohl’s has lowered its prediction for net sales for the full year from 4%-6% to 7%-8%. The forecast for the estimated earnings per share has declined from between $1.75 and $2.25 to $1.20 to $1.50. Kohl’s is expecting lower sales than anticipated and the company appears to believe it will continue to make a smaller profit than it previously thought.
This could lead to cost-cutting measures in the upcoming months, but Kohl’s has not disclosed any such plans for now. The weak economic results so close to the peak holiday seasons have caused retailers to worry about how they will perform in the next few weeks.
In an earlier release, Kingsbury explained, “We are not satisfied with our performance in 2024 and are taking aggressive action to reverse the sales declines. We must execute at a higher level and ensure we are putting the customer first in everything we do. We are approaching our financial outlook for the year more conservatively given the third quarter underperformance and our expectation for a highly competitive holiday season.”
Kohl’s CEO Steps Down, Ashley Buchanan to Take Over
As Kohl’s stocks tumble, the reasons also include the announcement of the company’s decision to replace the CEO early. Tom Kingsbury is scheduled to step down from his position on January 15, 2025, following which Michaels Companies’ CEO Ashley Buchanan will take over. Kingsbury was expected to retire in May 2025, but it appears he will step away from the reins a few months in advance.
He will likely continue as a member of the board and act in an advisory capacity to aid the incoming CEO. After holding senior executive roles at Walmart and Sam’s Club, Buchanan has spent the last five years as the CEO of Michaels, so he is no stranger to the leadership position and should hopefully be able to improve the company’s prospects once he takes over.
