Kohl’s Q3 Sales Drop 8.8% as Ashley Buchanan Prepares to Become CEO
Ashley Buchanan has his work cut out for him as the next chief executive officer of Kohl’s Corp.
In its last report to Wall Street before Buchanan steps in for current CEO Tom Kingsbury in January, the company turned in steep bottom- and top-line declines for the third quarter.
Net income fell 63 percent to $22 million, or 20 cents a diluted share, down from $59 million, or 53 cents, a year earlier. Sales for the quarter ended Nov. 2 declined 8.8 percent to $3.5 billion with a 9.3 percent drop in comparable sales.
EPS came in 7 cents below the 27 cents analysts projected and revenues were more than $200 million below expectations.
Investors — reacting to both the CEO switch late Monday and the earnings report — sent shares of Kohl’s down 16.5 percent to $15.32 in early trading on Tuesday.
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“Our third quarter results did not meet our expectations as sales remained soft in our apparel and footwear businesses,” Kingsbury said in a statement. “Although we had a strong collective performance across our key growth areas, including Sephora, home decor, gifting, and impulse, and also benefited from the opening of Babies ‘R’ Us shops in 200 of our stores, these were unable to offset the declines in our core business. Importantly, we delivered gross margin expansion and managed expenses tightly in the quarter.
“We are not satisfied with our performance in 2024 and are taking aggressive action to reverse the sales declines,” Kingsbury said. “We must execute at a higher level and ensure we are putting the customer first in everything we do. We are approaching our financial outlook for the year more conservatively given the third quarter underperformance and our expectation for a highly competitive holiday season.”
For the full year, Kohl’s expects sales to fall by 7 percent to 8 percent. And earnings per share are slated to drop to $1.20 to $1.50 — below both the $1.84 analysts had penciled in and the $2.85 registered a year ago.
Buchanan has been CEO of craft store Michaels Cos. for four years and before that spent 13 years rising up through the ranks at Walmart Inc.
Now he’s going to have to use that retail experience to figure out how to rejuvenate Kohl’s apparel business.
