Another retailer issues profit warning! Kohl's (KSS.US) Q4 same-store sales drop for the eighth consecutive quarter, expecting weak full-year performance growth.

Following Macy's (M.US) and Nordstrom (JWN.US), another department store retailer has warned that this year's performance will face challenges in terms of growth. Before the opening of the US stock market on Tuesday, Kohl's (KSS.US) announced that its fourth quarter performance with same-store sales fell below expectations and provided lower-than-expected performance guidance. About a year ago, the company appointed CEO Tom Kingsbury to lead the company, but has struggled to drive sales growth. The financial report shows that the company's same-store sales fell 4.3% in Q4, marking the eighth consecutive quarter of decline. Market expectations were for a 3.1% decline, but it was an improvement from the 5.5% decline in the previous quarter. Net sales fell 1.1% to $5.71 billion, better than the analyst average of a 1.3% decline, mainly due to holiday discounts on clothing and shoes, and strong sales of beauty products at Sephora stores. Earnings per share were $1.67, higher than the market's expectation of $1.28. In the fourth quarter, the company's inventory decreased by 10%, helping gross margin increase by 937 basis points. Zak Stambor, Senior Analyst at Insider Intelligence, said: "While Kohl's exceeded profit expectations by managing inventory and improving profit margins, there is still much work to be done due to revenue falling short of expectations." Looking ahead, Kohl's expects full-year earnings per share to be between $2.10 and $2.70, with the midpoint below the analyst average estimate of $2.61. The company also warned that the second half of the year will be affected by new regulations on credit card late fees, and expects net sales growth to range from a 1% decline to a 1% increase, compared to the previous expectation of a 0.4% decline. Federal regulators finalized a rule on March 5 limiting most credit card late fees to $8. However, the retailer stated that they expect Sephora store sales to exceed $2 billion by 2025 and will be adding 140 new small Sephora stores in the coming months. Since announcing the partnership in 2020, Sephora has brought a steady stream of new customers to Kohl's stores. Furthermore, Kohl's announced a collaboration with WHP Global, the parent company of the American baby product chain Babies R Us, to bring baby products, furniture, and more to approximately 200 stores in the US. Kingsbury said: "Looking ahead, we are laser-focused on achieving same-store sales growth by 2024. Our strategic initiatives aim to build momentum and make a more meaningful contribution. We are excited to collaborate with Babies R Us to meaningfully expand our business in the baby product category, which is a significant opportunity for the company." After the financial report was released, the company's stock price initially dropped by over 2%, but later rebounded and by the time of writing, the stock was up by about 0.5%. As of Monday's close, Kohl's stock price has declined by 5.2% year-to-date, compared to a 1% decline in the S&P SmallCap 600 Index.