Kohl’s (KSS) Stock Sinks 4% as Inflation Takes a Toll on Sales

  • Investors seem to be generally bearish on Kohl’s (KSS) stock after the company reported disappointing earnings this morning.
  • The retailer’s sales fell and the company cut its forward outlook, citing inflation.
  • KSS stock is dropping 4% in early morning trading.
Image of Kohl's logo on a Kohl's store
Source: Sundry Photography/Shutterstock.com

Kohl’s (NYSE:KSS) just released its second-quarter financial report for 2022. For the period, the retailer disappointed investors by posting declines on both the top and bottom lines. Most likely, high inflation was a major contributing factor to these results. Now, KSS stock is down more than 4% this morning.

Inflation is hitting retailers hard right now and Kohl’s is no exception. The company was already trying to recover from e-commerce threats to its business as well as the pandemic. High inflation only further complicates the situation for Kohl’s.

Or at least, that’s how traders seem to be interpreting the company’s quarterly data today. That pessimism may be justified, though. Kohl’s disclosed disappointing Q2 financial data. For one, the company’s Q2 comparable sales declined 7.7% year over year (YOY). Net sales decreased 8.5% as well.

CEO Michelle Gass observed a “softer demand outlook” in the report, which is likely an indirect reference to the impact of inflation. During a conference call, Gass noted that “2022 has turned out to be very different than we anticipated.”

More Bad News for KSS Stock

Indeed, inflation-heavy 2022 has been quite different than Kohl’s executives probably expected it to be. This certainly has had an impact on the company’s margins and profits.

During Q2, the company’s gross margin of 39.6% indicated a decline compared to the year-earlier quarter’s 42.5%. Turning to the bottom line, Kohl’s also reported diluted earnings per share (EPS) of $1.11. That marked a steep decline compared to $2.48 in Q2 2021.

Reduced forward guidance didn’t help to quell investors’ concerns, either. In the report, Kohl’s drastically lowered its fiscal 2022 EPS guidance from a previous range of $6.45 to $6.85 to a range of between $2.80 and $3.20.

As a result of these disappointing data points, KSS stock lost 4% of its value almost immediately today. Soon, the stock may be in danger of losing the crucial $30 level. All in all, this isn’t a positive sign for bullish folks hoping to see improvement in both Kohl’s financials and the retail sector at large.

On the date of publication, David Moadel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

Article printed from InvestorPlace Media, https://investorplace.com/2022/08/kohls-kss-stock-sinks-4-as-inflation-takes-a-toll-on-sales/.

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