After its board and management survived a proxy fight with an activist investor, Kohl’s Corp. announced that the first quarter was another struggle for the company.
Kohl’s missed a Zacks Investment Research estimate on earnings, which was for 75 cents. Revenues missed the Zack’s estimate by 3.6%.
Comparable sales decreased 5.2% in the quarter year over year, the company reported.
Total revenue slipped 4.4% to $3.72 billion as net sales slipped 5.2% to 3.47 billion versus the quarter a year before. Operating income was $82 million versus $273 million in the year-previous period.
In a conference call, Michelle Gass, Kohl’s CEO, said that company financials had been pressured by inflation, continued supply chain issues and the lapping of stimulus payments in last year’s first quarter. Still, she specified that home and children’s businesses drove the 5% sales to decline in the quarter, both down double digits percentage-wise from the 2021 quarter. On the positive side, the 200 stores with Sephora departments delivered positive low single-digit comp-store sales growth. She said Kohl’s several recently introduced brands, including Tommy Hilfiger, Calvin Klein, and Hurley, had performed well.
In terms of the ongoing sales process, Gass said the board would continue to work with shareholders’ best interests in mind. Kohl’s is engaging with multiple interested parties, she said, and they are preparing fully financed binding proposals. Kohl’s has formally communicated to the multiple parties engaged in the sales process its specific procedures for submission of actionable bids due in the coming weeks.
In detailing developments in the sales process as she announced financial results, Gass said, “We continue to engage with multiple interested parties. We have formally communicated the specific procedures for the submission of actionable bids due in the coming weeks. We continue with our detailed diligence phase and are pleased with the number of parties who recognize the value of our business and plan.”
As to first-quarter results, Gass said: “The year has started out below our expectations. Following a strong start to the quarter with positive low-single digits comps through late March, sales considerably weakened in April as we encountered macro headwinds related to lapping last year’s stimulus and an inflationary consumer environment. We remain committed to our long-term strategy and are encouraged that our updated store experience, with Sephora at Kohl’s shops, delivered positive comparable store sales across these 200 locations for the quarter. We continue to expect our business to improve as the year progresses, with growth in the second half as we benefit from the rollout of 400 additional Sephora stores, enhanced loyalty rewards and further investment in our stores.”