By Suzanne Kapner And Chelsey Dulaney
Kohl's Corp. posted disappointing sales growth in the first
quarter, raising concerns that a strategic plan unveiled last year
to jump start the struggling retailer was faltering.
The report precipitated a steep sell-off in Kohl's shares, which
suffered their biggest single-day decline ever, erasing some $2
billion in market value. Kohl's stock finished at $64.62, down
$9.89, or 13.3%, on the New York Stock Exchange.
Sales at existing stores grew 1.4% in the three months through
May 2, Kohl's said. The pace was slower than the 1.5% to 2.5%
growth Kohl's has forecast for the year, and is also a marked
slowdown from the fourth quarter, when sales at existing stores
grew 3.7%.
The report followed lackluster results from rivals Macy's Inc.
and J.C. Penney Co. that have raised further concerns about
sluggishness among consumers.
In Kohl's case, the culprit was a lack of shopper traffic.
"If there is any shortfall to our internal expectations on
sales, it was really about traffic," Chief Executive Kevin Mansell
said. "We're looking to drive increases in traffic, and traffic was
essentially flat in the first quarter."
For the quarter, Kohl's profit edged up to $127 million,
compared with $125 million a year earlier, as total sales grew 1.3%
to $4.1 billion.
During the early part of the last decade Kohl's ranked among the
country's fastest-growing retailers, but its sales have since
stalled. Last fall, it unveiled a multiyear plan to return to
growth. The strategy included stocking more national brands,
offering more compelling savings, tailoring merchandise to local
tastes and better targeting promotions.
The moves seemed to be paying off, at least for a while. Kohl's
reported a jump in fourth quarter sales at established stores, its
first same-store sales gain in a year.
The most recent quarter cut short that budding turnaround.
Kohl's said sales were unusually weak in February, but picked up in
March and April. Helping to drive sales was a 2.7% increase in
shopper spending per trip, although that was partially offset by a
1.3% decline in items purchased per transaction.
The results offer further evidence that consumers have hit a
soft patch this spring. Some analysts had been predicting that
pent-up demand from shoppers would broadly lift retail sales, but
government data showed they were flat in April as consumers
remained cautious. Retail sales have been flat or down in four of
the past five months, a trend that could weigh on the broader
economy.
With its trouncing on Wall Street Thursday, Kohl's stock was the
worst performer in the S&P 500. More than 25 million shares
changed hands, the largest one-day trading volume on record for the
company.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com and Chelsey
Dulaney at Chelsey.Dulaney@wsj.com
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