May 30 (Reuters) - Department store chain Kohl's cut its annual sales and profit forecast after posting a surprise quarterly loss on weaker consumer demand for its apparel and footwear, dragging its shares down 24% in early trading on Thursday.
American shoppers are still prioritizing essential purchases over discretionary products like apparel, electronics and home goods, as they face dwindling pandemic-era savings and higher interest rates.
"We recognize we have more work to do in areas of our business. We are approaching our financial outlook for the year more conservatively given the first-quarter underperformance and the ongoing uncertainty in the consumer environment," Chief Executive Officer Tom Kingsbury said in a statement.
The department store chain's dismal quarterly report comes in contrast to some of the other retailers including Abercrombie, which reported strong first-quarter sales owing to its merchandise being more on-trend.
"Kohl's has been too reliant on other brands such as Sephora, Amazon, and now Babies R Us to drive traffic rather than distinguishing its core brand identity," Emarketer senior analyst Zak Stambor said.
Shoppers are willing to spend if they see value in an on-trend, well-made dress from Abercrombie, or a healthy salad from Sweetgreen, he added.
Kohl's also said that lower clearance sales compared to last year resulted in a more than 600-basis-point drag on comparable sales that decreased 4.4% in the first quarter.
The company forecast fiscal 2024 net sales to fall between 2% and 4%, compared with its previous expectation of between a 1% drop and a 1% rise.
It also expects annual earnings per share in the range of $1.25 and $1.85, compared with its previous forecast of $2.10 to $2.70.
The company reported a per-share loss of 24 cents in the first quarter, while analysts were expecting a profit of 4 cents per share, according to LSEG data.
Kohl's stock was trading at $20.77 in early trading, while its peers Macy's and Nordstrom Inc, which is reporting later today, were down about 3% each.
