Cowen downgraded Kohl's Corporation ( NYSE: KSS ) to a Market Perform rating from Outperform due to a weakening and inflationary consumer backdrop that could drive EPS downside for the department store operator and cloud long-term visibility to EBIT expansion.
Analyst Oliver Chen pointed to ongoing pressures on the middle income consumer in particular that could threaten KSS from hitting its 7% to 8% EBIT margin target. "Specific concerns are elevated inventory levels, lowered guidance, traffic and promotions, and kid’s and women’s product execution," he wrote.
Chen believes the stock could be range bound as investors wait to see for traction within the women’s and kid’s categories, expense leverage, inventory rationalization, and merchandise margin resilience.
Cowen dropped the price target on KSS all the way down to $35 from $60.
Shares of Kohl's ( KSS ) fell 2.32% in premarket action on Thursday to $30.38.
Kohl's ( KSS ) is expected to post its Q2 earnings report before the end of August. See the consensus estimates and earnings beat/miss track record.
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Kohl's dips after Cowen downgrades amid consumer spending worries