Kohl’s Tuesday posted a bigger than expected drop in quarterly sales, as customers spent less dollars at its department stores amid persistently high inflation.

Shares of the Menomonee Falls, Wisconsin-based company, fell 2.4% in premarket trading.

American shoppers have continued to defer non-essential purchases and are choosing to spend more dollars on essentials as resumption of student loan repayments, depleting pandemic-era savings, and higher interest rates squeeze household budgets.

Its comparable sales decreased by 5.5% in the third quarter, compared with analysts’ estimate for a 3% fall, according to LSEG data.

However, Kohl’s became the latest retailer to signal that its efforts to cut down on inventories from the 2022 highs and have products that are in demand going into the holiday season was beginning to pay off.

Inventories were down 13% in the quarter, the third straight quarter of decline.

The company also raised the lower-end of its annual profit forecast and expected per-share earnings in the range of $2.30 to $2.70, compared with its previous forecast of $2.10 to $2.70.

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