Kohl’s withdraws forecast for 2022 sales and profits amid an uncertain economic outlook
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Kohl has taken down its forecast for sales and profits in 2022. The company said that an uncertain global economic outlook caused the move. The resignation of the company’s top executive is also to blame for the change.
Kohl’s withdraws forecast for 2022 sales and profits
The company’s removal of the 2022 performance forecast does not seem to affect its stocks. The company’s stocks jumped 5.44% on November 17, up 0.25% after hours.
Kohl’s has had a rough 2022. The department store has been struggling to attract shoppers to the platform. Despite offering heavy discounts to clear the excess stock, the number of shoppers in the store has remained relatively low.
On the other hand, Americans have been reducing spending on certain products, such as apparel. This has been caused by the rising inflation that has prompted the Federal Reserve to hike interest rates. This has caused a notable increase in borrowing costs, which has slowed down spending.
The company has also added that it would not repurchase any additional shares until its balance sheet appeared stronger than it currently was. During the third quarter of 2022, Kohl’s shares dropped 6.9%, in line with forecasts from analysts per the data provided by Refinitiv IBES.
The net income of the department store dropped to $97 million, which was a notable decline compared to the $243 million in the previous year. Nevertheless, the company’s performance is not different from what most US companies have been reporting this year.
US companies affected by rising inflation
The inflation levels in the US have been significantly high this year. As a result, the Federal Reserve has been hiking interest rates. This has affected the performance of most companies that have now been forced to lay off employees as they struggle to deal with the dropping consumer spending.
Last month, Amazon predicted that there would be a drop in sales during the holiday season. The company has also predicted a sluggish performance in the consumer sales forecast. At the time, this announcement caused the company’s shares to drop significantly.
Besides consumer retail brands, tech giants are also feeling the pinch. Meta recently announced it would be laying off more than 10,000 employees after a poor Q3 performance. Apple also laid off employees earlier this year.