By Savyata Mishra
(Reuters) -Kohl’s on Tuesday forecast a bigger drop in annual sales than previously expected, a sign the department-store chain is struggling to draw in shoppers as it navigates a CEO change ahead of a deal-heavy holiday shopping season.
Shares of the Menomonee Falls, Wisconsin-based company fell 18% before the bell, as it also reported worse-than-expected third-quarter results.
The weak forecast underscores an uncertain holiday season for the retail sector, which could lean in favor of competitors such as Walmart and Amazon.com, as customers turn increasingly bargain-focused.
Kohl’s, whose stock has declined 36% in value this year amid its turnaround efforts, announced the exit of CEO Tom Kingsbury a day earlier. He will be succeeded by Ashley Buchanan, retail veteran and Michaels Companies’ chief, in January.
The company now enters the critical and shorter holiday period, with retailers offering aggressive discounts to entice consumer spending early in the season.
“Our third-quarter results did not meet our expectations, as sales remained soft in our apparel and footwear businesses,” CEO Kingsbury said.
Kohl’s launched a three-day Black Friday early access event between Nov. 8 and 10 and is running Black Friday deals between Nov. 24 and Nov. 29.
Strong beauty sales from the company’s collaboration with beauty retailer Sephora are also starting to fade as Kohl’s finishes rolling out 140 Sephora small-shop openings this year.
“The revenues really struggled as they (the company) finished the (Sephora) rollout. Basically, the low-hanging fruit seems to be gone,” said M science analyst Matthew Jacob.
Kohl’s comparable sales dropped 9.3% for the quarter ended Nov. 2, its eleventh consecutive quarter of decline. Analysts on average had expected a 5.1% fall, according to data compiled by LSEG.
It earned 20 cents per share, missing an estimate of 28 cents.
The company now expects full-year net sales in the range of a 7% to 8% decline, compared to its prior forecast of a drop between 4% and 6%.
(Reporting by Savyata Mishra in Bengaluru; Editing by Pooja Desai)
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