Kohl’s (KSS) earnings Q1 2024

Kohl’s shares plummeted 25% Thursday after the company posted a surprise loss per share, coming in well below Wall Street’s expectations for a slight profit.

That share slide puts the stock on pace for its biggest single-day percentage decline ever.

In an interview with CNBC, CEO Tom Kingsbury chalked up slower sales to tough comparisons. He said the department store had higher-than-usual clearance levels in the year-ago period, as it tried to clean up inventory and jumpstart its turnaround plan.

He added sales trends started the quarter strong in January and February, but weakened in the last five weeks of the period as customers held back on buying seasonal merchandise, such as clothing for spring, because of poor weather. He said “fortunately, we see it coming back as the weather improves.”

For investors, Kohl’s weak results have raised questions about the company’s turnaround strategy. Led by Kingsbury, the previous leader of off-price chain Burlington Stores, Kohl’s has tried to attract shoppers by adding fresh merchandise like home decor, gifting items and pet goods. It’s also opened more Sephora shops inside of its stores.

So far, those efforts haven’t shown up much in the numbers. Kohl’s reported a net loss of $27 million, or a loss of 24 cents per share, for the first quarter compared with a year-ago profit of $14 million, or 13 cents per share.

Net sales decreased 5.3% to $3.18 billion compared with the year prior.

Here’s how Kohl’s did in its fiscal first quarter compared with what Wall Street was expecting, according to a survey of analysts by LSEG:

• Loss per share: 24 cents vs. a profit of 4 cents expected
• Revenue: $3.18 billion vs. $3.34 billion expected

The company on Thursday lowered its 2024 guidance. It now expects full-year net sales to decline between 2% and 4%. Wall Street analysts polled by LSEG had been expecting its 2024 sales guidance to reflect a 0.2% gain.

Kohl’s expects full-year diluted earnings per share in the range of $1.25 to $1.85 — far lower than the $2.34 per share expected, according to LSEG.

On top of company-specific challenges, Kingsbury said the company took a more conservative stance with its full-year outlook because of higher interest rates and inflation.

“While spending among our high-income customers has remained steady, our middle-income customer continues to be impacted,” he said in the release.

Despite the first-quarter results, he told CNBC that Kohl’s has made progress with newer initiatives. For example, he said, the women’s category showed positive trends and Sephora in-store shops have continued to be a bright spot.

For Sephora at Kohl’s, comparable sales, a metric that takes out the impact of store openings and closings, rose 20% year over year during the quarter.

That’s far higher than Kohl’s comparable sales, which sank by 4.4% during the…