Kohl’s Falls as Results Illustrate Retail’s Stark Divide

(Bloomberg) -- Kohl’s Corp. shares fell as much 14% after the U.S. retailer posted a quarterly loss and declining sales, a sign of the struggle of many retailers amid pandemic uncertainty.

The company’s second-quarter report contrasts sharply with the booming sales figures released Tuesday by Home Depot Inc. and Walmart Inc., two massive retailers that were deemed essential and allowed to operate through the pandemic. Kohl’s and its nonessential peers, meanwhile, have struggled to regain sales as shoppers stay home and flock to e-commerce.

Kohl’s posted a loss of 25 cents a share when excluding some items -- better than the estimated 70-cent loss. Sales were $3.2 billion -- a decline of 23% from a year earlier but still above analyst expectations.

The results contrast with Home Depot and Walmart and “underscore the discriminatory and uneven impact of the pandemic on retail,” Neil Saunders, managing director of GlobalData Retail, said in research note. The company’s sales decline “demonstrate that the recovery for some retailers will be prolonged and protracted.”

With the pandemic still roiling its operations, Kohl’s once again refrained from providing same-store sales. That’s the figure most watched by analysts and one of the best indicators of a retailer’s strength.

The company said that all of its stores reopened during the quarter and it generated positive operating cash flow. Kohl’s has added curbside pickup and plexiglass barriers while requiring workers to wear masks, a bid to ease consumers’ nerves amid the Covid-19 pandemic.

Looking ahead, Kohl’s said it expects Covid-19 to continue to hit its business in the second half of the year and so it’s planning “conservatively.” It also sees customers starting holiday shopping earlier than usual, and it’s “prepared to chase any demand upside as it unfolds,” it said in slides accompanying the release.

Kohl’s shares fell to as low as $20.26 on Tuesday, the lowest intraday in almost five months. the stock had declined 54% this year through Monday’s close.

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