National Retail Federation President and CEO Matthew Shay says consumer confidence is still very high, despite the pandemic, and he is encouraged to see growth as the economy continues to open.
Kohl’s share tumbled 14% on Tuesday despite a better-than-expected second quarter as investors worried about the fallout from the coronavirus pandemic in an already troubled retail sector.
| Ticker | Security | Last | Change | Change% |
|---|---|---|---|---|
| KSS | KOHL’S CORP. | 20.01 | -3.44 | -14.67% |
Kohl’s said it earned $ 47 million, or 30 cents a share, from $ 1.51 a share in the year-ago period. On a adjusted basis, it lost a quarter a share, much smaller than the loss of 88 cents a share that analysts expected. Revenue fell just over 23% from a quarter a year ago, to $ 3.41 billion, well above the $ 3.07 billion consensus estimates.
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That sounds like good news, and in fact Kohl’s shares did immediately after the report, climbing nearly 5% in early trading. However, the good times did not last. By midnight, the losses that Kohl’s had mounted were down 13.5%, to $ 20.28 at a recent check. So what happened? It could be a number of things. A less bad quarter can only go so far as to help a stock, in particular a department store, given that the sector has been losing market share for years, with problems that the pandemic foresaw for a long time. (The momentum Nordstrom (JWN) received from its better-than-fear quarter in May was short-lived.)
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In addition, Kohl’s did not report any sales from the same store, citing the pandemic. Before Covid-19, it was quite rare for a company to omit this metric. (However, we saw a strong player, Lululemon Athletica [LULU], remember this information without hurting their inventory.) The conclusion could be that if Kohl’s had good news to share in terms of comps, it would have been quick to promote it.
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CEO Michelle Gass also warned that the company was safe “from the crisis to affect our company in the long term”, even though she was quick to argue that the company could continue to keep up with changing consumer habits. That is to be expected, but not necessarily reassuring as the outbreak drags into the US
| Ticker | Security | Last | Change | Change% |
|---|---|---|---|---|
| WMT | WALMART INC. | 134.71 | -0.89 | -0.66% |
Finally, Walmart (WMT) reported today, and its results showed that sales were sluggish when incentive checks began to run last month, while shopping to school has been slow for some time, especially for clothing. That report could also weigh on Kohl’s, given concerns that these factors will also hurt traffic.
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Write to Teresa Rivas at [email protected]
