(CNN) — As consumers pulled back on their holiday spending amid biting inflation, it seems that Kohl’s dropped off many shoppers’ lists.
Sales at Kohl’s stores open for at least one year dropped 6.6% during the holiday quarter, the company said Wednesday. The retailer also lost $302 million during the quarter.
The losses drove Kohl’s stock down around 8% during pre-market trading Wednesday.
Inflation squeezed sales, the company said, forcing it to mark down some products to entice shoppers to buy — which hurt its profit margin.
Kohl’s comments echo those of other retailers, like Walmart and Target, who have said consumers are strained, although those companies posted stronger holiday results than Kohl’s did.
One reason for that: The lower- and middle-income customers who are core to Kohl’s customer base have pulled back on buying furniture, electronics and other discretionary goods and shifted to groceries and essentials. This change in shopping behavior hurts Kohl’s more than big-box rivals because the chain does not sell food, nor as many necessities.
‘Uncomfortable middle ground’
“Kohl’s is caught in an uncomfortable middle ground between discount and high-end retailers, which leaves it particularly vulnerable to consumers’ shifting spending patterns,” Insider Intelligence retail analyst Zak Stambor said in a note to clients.
The company expects overall sales to decline by up to 4% this year, which would be an improvement from its 7.1% sales drop in 2022.
Still, Kohl’s is struggling. The chain faced a messy fight with activist investors last year who criticized the company’s performance and called for sweeping changes and pushed Kohl’s to spin off its online business, sell its real estate or take the company private.
Kohl’s explored a sale, but eventually called off the process due to a volatile market.
In November, Kohl’s chief executive Michelle Gass announced she was leaving the company to become the CEO-in-waiting at Levi’s. She has been replaced by Tom Kingsbury, a longtime executive at Burlington Stores.
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