Kohl's has undergone repeated leadership turnover, including firing a CEO in April for trying to steer company business to his girlfriend, precipitating a third CEO transition. Interim CEO Michael Bender took the reins in May. Net sales fell 5.1% in the quarter ended August 2 and are forecast to decline 5% to 6% for the year. The business is about 20% smaller than in 2019 and has lost millions of customers, with most categories showing double-digit declines except Sephora shops. Cost discipline and leaner inventory produced a better-than-expected adjusted profit and a raised full-year forecast. About one-third of shares are held short and recent meme trading amplified a 20% share spike, though shares remain near multi-decade lows.
Few large retailers have been through the wringer as much as Kohl's over the last few years. Most dramatically, in April, it fired its CEO for trying to steer company business to his girlfriend, precipitating its third CEO transition in as many years. But more importantly, Kohl's has been losing sales for years, with one turnaround attempt after another falling short of restoring a once-beloved retailer.
So on Wednesday, shares shot up 20% when Kohl's had a rare piece of good news to share with Wall Street: a much better than expected adjusted profit, thanks to cost discipline and leaner inventory, that lead it to raise its full year forecast. Clearly investors will take victories where they can find them, because victories have been far and few between for the chain. (Shares have only recovered slightly from 30 years-lows hit this spring.)
The fact remains that Kohl's is struggling: Net sales fell 5.1% in the quarter ended August 2 and are still expected to fall for the year between 5% and 6%, slightly less awful than the 5% to 7% range in its previous forecast. Kohl's has lost millions of customers and its business is 20% smaller than it was in 2019, while T.J. Maxx, Walmart and Target are much larger now.
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