Kohl's Corporation KSS stock has shown significant volatility, with shares fluctuating between highs and lows over the past year. Overall, the stock has trended downward, reaching a new 52-week low of $14.22 on Nov. 26, showing a stark decline compared with its 52-week high of $29.60.
While the current price of $15.43 marks an 8.5% rebound, it still reflects a nearly 48% discount from the high, highlighting a challenging year for the retailer.
KSS Stock Navigates Turbulent Waters
KSS stock’s volatility over the year reflects growing investor concerns about its ability to adapt to changing market dynamics and consumer preferences. The Kohl’s stock has lost as much as 39.6% in the past year compared with the broader industry’s 2.8% decline. However, the Retail-Wholesale sector and the S&P 500 index have recorded growth of 35.8% and 32.4%, respectively, in the same period.
Kohl’s One-Year Stock Price Performance
Image Source: Zacks Investment Research
KSS shares are trading below its 50 and 200-day moving averages, suggesting a lack of upward momentum and market skepticism about the stock's prospects. Breaking free from this bearish technical setup will require concrete improvements in the company’s fundamentals and broader macroeconomic support.
KSS Stock Trades Below 50 & 200-Day Moving Averages
Image Source: Zacks Investment Research
Analyzing KSS Stock's Drop to 52-Week Low
Kohl’s plunged to its lowest level of the year following its disappointing third-quarter fiscal 2024 result released on Nov. 26, 2024, coupled with a downgraded full-year outlook. The company has notified that sales have been under pressure so far in 2024, with conditions worsening in the third quarter fiscal 2024. Net sales fell 8.5% year over year and earnings per share (EPS) plummeted 62.3%, both missing the Zacks Consensus Estimate.
The third-quarter results highlighted significant weaknesses in Kohl’s core apparel and footwear categories. Notably, declining comparable store sales (comps) have become a recurring theme for KSS, driven by dwindling foot traffic. Comps dropped 9% year over year in the fiscal third quarter, led by a 3% decline in foot traffic, particularly during the critical back-to-school season. This softness reflected weak customer engagement and ineffective promotional strategies.
While the company saw strong performances in key growth areas like Sephora, home decor, gifting and impulse-buy categories, as well as the launch of Babies "R" Us shops in 200 locations, these gains were insufficient to offset steep declines in the company’s core business segments.
In light of its underwhelming third quarter and a highly competitive holiday season ahead, Kohl’s has revised its financial outlook for fiscal 2024. The company expects a year-over-year net sales decline of 7-8%, with comparable sales falling 6-7%. The EPS guidance has been cut to $1.20-$1.50.
Although Kohl’s remains a familiar name in the retail space, it struggles to define its place in a highly competitive market. The company’s exit from the fine jewelry business has further compounded sales challenges, creating a persistent drag that KSS is working to address.
These ongoing struggles and the resulting stock decline raise a critical question for investors: Does Kohl’s represent a value opportunity or a warning of deeper structural issues?
Kohl’s Earnings Estimates Indicate Downtrend Trend
The Zacks Consensus Estimate for Kohl’s fiscal 2024 and 2025 EPS declined 15.8% and 22.2%, respectively, in the last 30 days. The downward revision in earnings estimates indicates a bearish outlook on the stock.
The Zacks Consensus Estimate for Kohl’s fourth-quarter fiscal 2024 EPS declined 25.7% in the last 30 days, highlighting the concerns the company is expected to encounter in the near term.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
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Can KSS’s Discounted Stock Price Spur Investor Interest?
Kohl’s is presently trading at a discount to its industry on a forward 12-month P/S basis, making the stock an attractive pick for investors. The recent pullback has brought the KSS stock’s valuation much below the historical and industry benchmarks.
The company’s forward 12-month P/S multiple of 0.11X reflects a significant discount to its five-year high of 0.55X and the industry average of 0.37X. It stands below the S&P 500’s average of 5.25X. The stock also trades at a discount to its peers, including Dillard’s Inc. DDS, Macy’s M and Target TGT, which are trading at forward 12-month P/S multiples of 1.12X, 0.21X and 0.55X, respectively.
Trading much below its five-year high and industry peers, the current valuation appears more affordable and appealing, presenting an opportunity to accumulate shares. The stock’s current Value Score of A validates its appeal.
Image Source: Zacks Investment Research
That said, let us analyze the company’s inherent strengths.
Decoding Kohl’s Core Strengths
Kohl's has long been a prominent player in the retail industry, maintaining a strong foothold in the department store sector. Its brand appeals to a wide range of consumers, from price-conscious shoppers to families seeking a convenient, all-in-one retail destination.
KSS has forged partnerships with leading brands, expanding its product range and attracting a diverse customer base. A prime example is its collaboration with Sephora, which has boosted Kohl’s beauty segment and attracted younger, trend-driven shoppers. Additionally, partnerships with renowned national brands like Nike, Under Armour and Levi’s further enhance its competitive edge in the retail market.
Kohl’s has also ventured into new growth areas to diversify its offerings. The introduction of Babies "R" Us stores in 200 locations taps into the increasing demand for baby products. The company has expanded its home décor and gifting categories, catering to a broader audience. These efforts not only contribute to additional sales but also help widen Kohl’s appeal in the marketplace.
The company has made notable progress in refining its omnichannel experience, which has become a key competitive advantage. By integrating its online and in-store operations, Kohl's enables customers to shop effortlessly across various platforms, enhancing the overall shopping experience.
How to Strategize Your KSS Stock Investment?
Kohl’s core strengths, from its well-established brand recognition to its growing omnichannel capabilities and strategic partnerships, provide a solid foundation for the company’s future. While the retail landscape is challenging, the company’s ability to adapt, innovate and leverage its strengths may position it for a successful turnaround. However, the recent quarterly performance underscores the need for bold strategic shifts to regain market relevance. KSS’s lowered revenue and EPS projections for fiscal 2024 and bleak holiday season expectations raise questions about its performance.
Investors looking for value may see Kohl’s as a bargain buy at current valuation levels, particularly if the company can demonstrate progress in its turnaround efforts. However, the stock’s sharp decline and broader operational concerns signal caution. KSS currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
