Kohl’s issued a grim fourth quarter sales forecast after third quarter same store sales fell 1.6% and profits fell short of expectations.
The operator of 1,158 stores nationwide announced new merchandising initiatives involving Juicy Couture and Izod, but those programs won’t hit stores until the fall of 2014. In the meantime, Kohl’s said total sales for the third quarter ended November 2, declined 1% to $4.4 billion while profits declined even more sharply with net income falling 18% to $177 million and earnings per share declining 11% to 81 cents, below the 86 cents analysts had forecast.
“As we enter the Holiday season, we believe we are well-positioned from a merchandise content and inventory perspective to gain market share,” said Kevin Mansell, Kohl’s chairman, president and CEO. “We have increased our marketing spending and improved its impact and reach in order to drive higher traffic to our stores and on-line. Our customer will find the perfect gift for everyone on her shopping list at Kohl's and will be excited by the value she receives in both our only-at-Kohl's and national brands."
Kohl’s optimism regarding the effectiveness of its marketing programs is not reflected in its fourth quarter sales and earnings forecast. The company said it expects total sales to decline between 2% and 4% and same store sales to be flat to down 2%. As a result, the company forecast fourth quarter profits in the range of $1.59 to $1.74, with analysts’ consensus estimate at $1.69. The retailer lowered its full year profit forecast to a range of $4.08 to $4.23 per share from a prior forecast of $4.15 to $4.35 per share.
And in a move that suggests the company is weary of quarterly scrutiny from investors announced plans to provide only annual financial guidance beginning in 2014.