Kohl’s, Inc. reported earnings fell 60 percent in the third quarter on a 7 percent sale decline. Results were in line with the recent release of preliminary results.

In the quarter ended October 29, earnings fell to $97 million, or 82 cents s share, from $243 million, or $1.65, a year ago. Sales reached $4,277 million against $4,600 million a year ago.

Gross margins eroded 262 basis points to 37.3 percent from 39.9 percent a year ago. SG&A expenses were down 3.3 percent to $1,334 million from $1,380 million a year ago but increased as a percent of sales to 31.2 percent from 30 percent a year ago.

The retailer provided preliminary results on November 8 while announcing CEO Michelle Gass was stepping down to become president of Levi Strauss. At the time, earnings of 82 cents a share topped Wall Street’s consensus target of 63 cents.

Tom Kingsbury has been appointed interim CEO until a permanent successor is named. Kingsbury has served as a Kohl’s director since 2021.

“The Kohl’s Board is focused on supporting the management team during this CEO transition period, as well as the Board’s search committee in its pursuit of finding the next CEO to lead Kohl’s. We look forward to partnering with Interim CEO Tom Kingsbury and the entire leadership team to execute at the highest level this holiday season, while also capitalizing on opportunities to strengthen the business. Kohl’s is a great company with extremely bright prospects, and I am confident we will find the right candidate to successfully position Kohl’s to drive sales, grow earnings and create shareholder value. On behalf of the Board, I want to thank all of our associates for their dedication and hard work,” said Peter Boneparth, Kohl’s independent board chair.

2022 Outlook Commentary
Given the recent volatility in business trends, the significant macroeconomic headwinds, along with the unexpected CEO transition, the company will not be providing guidance for the fourth quarter, and therefore is withdrawing its prior full-year 2022 guidance.

Accelerated Share Repurchase Agreement
On November 2, 2022, the company’s $500 million accelerated share repurchase agreement (ASR) was completed, with the final settlement occurring on November 7, 2022. In total, the company received 17.9 million shares, including 11.8 million shares in the third quarter and the remaining 6.1 million shares in the fourth quarter.

Photo courtesy Kohl’s