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What to Expect from Kohl’s in the First Quarter

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Part 3
What to Expect from Kohl’s in the First Quarter PART 3 OF 5

What to Expect from Kohl’s Stock in 2018

YTD stock price movement

As of May 14, Kohl’s (KSS) stock price is up 12.8% on a YTD (year-to-date) basis. Kohl’s stock has been on an uptrend following a strong performance over the holiday season. In comparison, Macy’s (M) stock price is up 17.6%, while Nordstrom (JWN) stock is up 4.1%. On the other hand, JCPenney (JCP) is down 11.1% as of May 14.

What to Expect from Kohl’s Stock in 2018

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However, on May 11, Credit Suisse stated that Kohl’s could report sales below expectations for the first quarter. According to a CNBC report, the research firm said the relatively cool beginning to spring this year could impact sales of early spring apparel merchandise. Credit Suisse mentioned that Kohl’s sales are more sensitive to weather changes compared to other department stores.

Before this, department store stocks reacted sharply to an observation made by a Deutsche Bank analyst Paul Trussell. On May 7, he said that the department store sector offered a limited upside potential, which sent Kohl’s down 4.3%.

What ails department store stocks?

Department stores have been negatively impacted by the expansion of e-commerce, especially Amazon. The increasing shift to online sales has resulted in lower traffic at stores. To retain market share, many traditional retailers including Kohl’s are focusing on the development of their digital (especially mobile) and omnichannel capabilities, tightening their inventory management, and aggressive cost cuts.

Kohl’s has also struck a deal with Amazon to boost its growth prospects. Kohl’s partnered with Amazon to set up a 1,000-square-foot Amazon store-in-store at ten of its stores. Further, Kohl’s will accept Amazon returns at ~82 locations in Los Angeles and Chicago from customers and ship them to Amazon for free. The idea behind the partnership is to make use of free store area and boost traffic at Kohl’s stores.

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