What happened
Few investors are bullish about retail stocks just now, but the bears are really coming for Kohl's (KSS 6.51%). For the second time this week, on Friday the company's shares took a massive hit on the market, closing the day nearly 13% lower. The stock was battered by a slew of analyst price target cuts following an ugly quarterly earnings report.
So what
On Thursday, Kohl's published a first-quarter earnings release that made almost nobody happy. On a 5% year-over-year decline in comparable sales, the company's revenue fell at a 4% clip to just under $3.72 billion. Non-GAAP (adjusted) net income came in at $14 million ($0.11), well down from the first-quarter 2021 result of $165 million.
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On average, analysts tracking Kohl's stock were expecting modestly lower revenue of $3.69 billion, but they figured the company would earn $0.72 per share in adjusted net income.
The veteran retail operator's full-year 2022 guidance wasn't inspiring, either. The company is modeling flat-to-1% year-over-year growth in net sales for the period, with per-share earnings coming in at $6.45 to $6.85 -- notably short of the $7.18 collective analyst estimate.
Now what
Kohl's is looking for a way out. The company's CEO, Michelle Gass, said that it will "continue to engage with multiple interested parties" and that it is in the process of arranging bids from entities interested in potentially acquiring it.
None of this is inspiring confidence in the stock. A raft of investment banks lowered their price targets on the shares on Thursday and Friday. Among that crowd was Morgan Stanley, whose analyst Kimberly Greenberger cut hers to $38 per share from the previous $42. Greenberger is maintaining her underweight (i.e., sell) recommendation on the stock.
