There is likely more pain ahead for already-battered Kohl’s ( NYSE: KSS ) shareholders, according to UBS analyst Jay Sole.
In a note to clients on Tuesday, he outlined a proprietary survey in which a struggle to retain customers, waning near-term purchase intentions by consumers, and an aging customer base were all revealed. Alongside rising prices and cost impacts, Sole reiterated his bearish sentiment on the stock, assigning a “Sell” rating to shares.
“We believe the market is underestimating the impact on KSS earnings from share loss to
other retail channels like online pureplays and Off-Price,” Sole told clients. “This plus macro headwinds likely lead to earnings misses vs. the sell-side consensus and weakening sentiment.”
While he admitted that the Sephora initiative could possibly shift this narrative, the myriad of initiatives attempted prior to the present partnership with the makeup retailer do not inspire confidence. For example, Amazon returns did not do much to turn round sales trends in the longer term, he noted.
In the end, the survey suggested price is the pivotal point for Kohl’s consumers. Given the current economic environment, Sole was not optimistic on sales dynamics for the company moving forward.
“We continue to see elevated risk inflation causes decelerating industry sales growth, driving downward revisions to sell-side EPS estimates and weighing on market sentiment,” he concluded.
Sole has assigned a “Sell” rating to shares since January. Since that point, shares have declined about 40%.
Read more on Bank of America’s recent shift to a “Sell” rating on Kohl’s .
For further details see:
Kohl’s downside is underestimated by the market - UBS