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5 Retail Stocks That Could Struggle During the Back-to-School Season

Hot temperatures might hurt consumer spending this Q3

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kohls kssFor Kohl’s (KSS), the third quarter is historically the second-highest for sales but only the third-highest for profits, suggesting the company relies on bigger back-to-school markdowns than other retailers mentioned.

Unfortunately, relying on discounts can cut both ways. You could argue that since Kohl’s loves back-to-school sales, it will get more penny-pinching shoppers this season. At the same time, you could also posit that its customers pinch pennies more to begin with. If the latter is the case, Kohl’s could feel the sting of higher electricity bills even more than some rivals.

Either way, there’s not much room for error. Kohl’s is currently slated to post a mere 1.4% improvement in sales during the upcoming quarter, and a 4% improvement in profits. Any softness could lead to a sales decline or earnings miss, either of which could prompt a selloff.

A bright spot: Kohl’s is one of the few retail stocks that actually boasts a decent dividend — consistent income perfect for bumps like a short-term back-to-school swoon.

As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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