(Reuters) -Kohl’s posted a bigger than expected drop in quarterly sales on Tuesday as customers spent less dollars at its department stores amid persistently high inflation, sending its shares down 4% before the bell.
American shoppers have continued to defer non-essential purchases and are choosing to spend more dollars on essentials as resumption of student loan repayments, depleting pandemic-era savings, rising credit card debt, and higher interest rates squeeze household budgets.
The results came after retail bellwether Walmart (NYSE:) and rival Macy’s (NYSE:) took a cautious stance going into the holiday shopping season, which is expected to rise at the slowest pace in five years.
Kohl’s (NYSE:) comparable sales decreased for a seventh-straight quarter, as the 5.5% drop missed analysts’ estimate for a 3% fall, according to LSEG data.
The department store chain, which is more exposed to lower- and middle-income customers, also said it expected its annual sales to fall between 2.8% and 4%, compared to a previous forecast for a 2% to 4% decline.
However, Kohl’s became the latest retailer to signal that its efforts to cut down inventories from their 2022 highs and have products that are in demand going into the holiday season were beginning to pay off.
Inventories were down 13% in the quarter, its third straight quarterly decline. Last week, Target reported a 14% decline in its inventories.
The company raised the lower end of its annual profit forecast, expecting per-share earnings in the range of $2.30 to $2.70, up from its previous forecast of $2.10 to $2.70.
Kohl’s reported a profit of 53 cents per share in the third quarter. Analysts were expecting a profit of 35 cents per share.