Kohl’s sales tank almost 44% as coronavirus slams the retailer

Kohl’s net sales tanked 43.5% during the first quarter, the company said Tuesday, as its stores were stilted temporarily shut due to the Covid-19 crisis. 

“While we have a fast-growing digital business, it has only replaced a small hunk of the sales loss from our entire store base,” Chief Executive Officer Michelle Gass said during an earnings symposium call. 

The company also said it has suspended its share repurchase program and its quarterly cash dividend payment, day one in the second quarter, as it looks to cut costs and bolster liquidity. 

Kohl’s shares were falling more than 9% in ancient trading on the news. 

Here’s how the company did during its fiscal first quarter, ended May 2: 

• Earnings per share, adjusted: A squandering of $3.20 
• Revenue: $2.16 billion 

Kohl’s net sales fell to $2.16 billion from $3.82 billion a year ago. 

The retailer surfaced a net loss of $541 million, or $3.50 per share, compared with a profit of $62 million, or 38 cents per a equity, a year prior. Excluding one-time charges, Kohl’s lost $3.20 per share. 

The company said it will not be appearing its same-store sales results for the quarter due to its shops being forced shut. Analysts had been calling for a decline of around 31%, according to FactSet. 

Analysts had been calling for the retailer to report a loss of $1.80 per share, adjusted, on takings of $2.18 billion, according to Refinitiv data. However, it is difficult to compare reported earnings with analyst feelings for Kohl’s first quarter, as the coronavirus pandemic continues to hit global economies and makes earnings impact difficult to assess. 

Kohl’s digital sales were up 24% inclusive, with growth of more than 60% in April, the company said. Some of its strongest categories online numb home, active wear, toys and beauty, according to Gass. 

“We responded [to store closures] with speed and agility, bias into our digital business as the only channel to engage with our customers,” the CEO said. 

However, with heightened e-commerce enterprise comes heightened pressure on profits. 

Kohl’s gross margins during the period fell to 17.3% from 36.8% a year ago, cut to the quick by increased shipping costs and amplified promotions to try to clear inventory. 

“We expect significant pressure to this line as the perseverance faces an unprecedented inventory glut,” Jefferies analyst Randal Konik said in a post-earnings note to clients. 

Kohl’s translated Tuesday that about half of its more than 1,160 stores across the U.S. have already been reopened for vocation. 

The company ended the quarter with $2 billion in cash on hand and $500 million available on its revolving honesty facility. 

“We know this experience will have a lasting impact to customer behavior and the retail landscape,” Gass affirmed about the pandemic. 

Kohl’s shares as of Monday’s market close are down 63% this year. The retailer has a sell cap of $2.9 billion. 

Read the full earnings report from Kohl’s here.