Pre-market stock price crashes! Kohl's performance guidance collapses, new CEO struggles to reverse the decline

According to Zhitong Finance APP, Kohl's (KSS.US) released its annual sales guidance on Tuesday, indicating a significant decline in sales, with profits expected to fall below Wall Street estimates. Currently, this American department store chain is striving to turn the situation around under the leadership of its new CEO, but faces challenges of unstable demand.

The company expects same-store sales to decline by 4% to 6% in 2025, far worse than the market expectation of a 0.9% decline. Earnings per share are expected to be between $0.10 and $0.60, while analysts had anticipated $1.23.

Additionally, Kohl's same-store sales decline during the holiday season was also worse than market expectations. Data shows that same-store sales fell by 6.7% in the fourth quarter, compared to a market expectation of a 6.2% decline.

Following the earnings report, the apparel retailer's stock plummeted 15% in pre-market trading on Tuesday.

Since taking office in January, new CEO Ashley Buchanan has launched layoffs and store closure plans in an effort to revitalize the company.

However, with rising inflation risks in the U.S. and increasing concerns about economic recession, along with the chaotic implementation of Trump tariffs, Kohl's, like larger competitors Macy's (M.US) and major retailers Walmart (WMT.US) and Target (TGT.US), has also lowered its performance expectations.

This uncertainty has exacerbated Kohl's predicament, as the company's sales have been under pressure over the past three years as consumers have shifted to cheaper options from discount retailers, including TJX Companies (TJX.US).

The company has also been harmed by its own missteps, including its previous exit from the high-end jewelry business and prioritizing the opening of Sephora stores.

In 2024, a significant reduction in private label clothing production has also impacted sales of women's and children's clothing, as cost-conscious consumers have opted for competitors' retailers.

So far this year, Kohl's stock price has fallen by a cumulative 14%.

In response, Kohl's stated that the company has identified key areas of focus, including regaining market share in categories such as high-end jewelry, and is taking action to reposition the company.

To improve performance, Kohl's has also increased collaboration to boost store traffic. Last year, the company announced plans to open Babies “R” Us stores in some locations