(Financial Eye) -Kohl’s Corp cut its full-year earnings forecast on Thursday, joining some of America’s biggest retailers in warning that a four-decades high inflation is starting to take a toll on profit margins and consumer spending power.
Shares of the company, which reiterated that it is talks with multiple parties for a potential sale, fell 3.4% to $41.64 in premarket trading.
Walmart (NYSE:) Inc and Target Corp (NYSE:) reported substantial drops in quarterly earnings this week due to surging fuel and freight costs, and warned rising prices are pushing consumers to prioritize spending on essentials.
That evidence of red-hot inflation seeping into the economy sparked a sell-off in retail stocks, with Kohl’s (NYSE:) shares sinking about 11% this week.
“Sales considerably weakened in April as we encountered macro headwinds related to lapping last year’s stimulus and an inflationary consumer environment,” Kohl’s Chief Executive Officer Michelle Gass said.
The company said it expects fiscal 2022 adjusted earnings of $6.45 to $6.85 per share, compared with its previous forecast of $7.00 to $7.50.
Kohl’s forecast full-year net sales to rise only as much as 1%, compared with its previous forecast of a 2% to 3% increase.
The company’s net sales fell 5.2% to $3.47 billion in the first quarter ended April 30. Analysts had expected $3.68 billion, according to Refinitiv data.
On an adjusted basis, Kohl’s earnings fell about 90% to 11 cents per share in the reported quarter.