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The company’s shares fell more than 10% in premarket trading and triggered a 4% drop in shares of rivals Macy’s Inc (NYSE:M) Nordstrom Inc (NYSE:JWN).
Surging prices of food and homes over the last year have forced customers to cut back on spending on non-essential products, pushing Kohl’s and other retailers into steeper discounts and promotions to clear excess stocks of casual and athleisure apparel.
Those discounts were the major contributor to a more than 1,000 basis point decline in fourth-quarter gross margins, Kohl’s said.
The company has also been especially hard hit as it caters more to inflation-hit lower-income customers.
Kohl’s reported a loss of $2.49 per share for the fourth quarter ended Jan. 28, compared with estimates for a profit of 98 cents.
The results reflect “sales pressure driven by the ongoing persistent inflationary environment,” newly appointed Chief Executive Officer Tom Kingsbury said in a statement.
The company expects fiscal 2023 earnings per share of $2.10 to $2.70, compared with analysts’ estimates of $3.20, according to Refinitiv IBES data.
U.S. retailers including Walmart (NYSE:WMT) and Target Corp (NYSE:TGT) are taking a conservative approach to their expectations for 2023, as accelerating U.S. consumer prices raise fears that the Federal Reserve could further lift borrowing costs to cool demand, likely tipping the economy into a recession.
Comparable sales at Kohl’s fell 6.6% in the fourth quarter, compared with analysts’ estimate of a 3.7% decrease.
