Kohl’s ( NYSE: KSS ) fielded another analyst downgrade from Gordon Haskett’s Chuck Grom on Thursday, adding to a steady flow of price and rating cuts since Friday.
Of course, Grom touched upon the deal dissolution that has sent shares spiraling down ward in the past week. However, he added that there may still be too much optimism about a back to school shopping season serving as a rebound catalyst.
“We are becoming incrementally concerned around the Back-to-School period, which for Kohl’s could become problematic,” he advised clients. “Said differently, we think it’s prudent to take the “under” on upcoming expectations following a relatively strong BTS period a year ago along with the high likelihood that the consumer undergoes a post Summer vacation hangover in the coming months given today’s record high energy and food price backdrop.”
While he applauded the Sephora partnership, it is not enough to offset lagging sales elsewhere and even foot traffic that picked up on the partnership initially is now on the decline. As a recessionary scenario looms, the risks to sales are likely to increase into year end.
As such, he downgraded the stock to “Hold” and slashed his price target to $30 from a prior $52.
“All told, we often say it’s “not the player . . . it’s the game” and in the case of Kohl’s that partially applies,” Grom concluded. “The biggest risk, in our view, to the downgrade is the potential for a new suitor to emerge, but with recessionary fears looming, we don’t think that’s probable any time soon.”
Read Bank of America’s downbeat review of the broader department store space .
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Kohl’s catches another downgrade due to Back-to-School concerns