In a report released today, Lorraine Hutchinson from Bank of America Securities reiterated a Sell rating on Kohl’s, with a price target of $8.40.
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Lorraine Hutchinson’s rating is based on a combination of factors that indicate potential challenges for Kohl’s in the near future. Despite a better-than-expected second-quarter earnings per share, driven by lower selling, general, and administrative expenses and increased credit revenue, the outlook for the latter half of the year appears less favorable. The anticipated decline in credit revenue is expected to become a headwind, putting pressure on future earnings per share. Additionally, while there was some growth in Sephora sales and impulse purchases, overall comparable sales were down, and the macroeconomic environment remains volatile, making a sales recovery challenging.
Moreover, although proprietary brands have shown some growth and contributed to gross margin improvements, there are concerns about consumer spending on discretionary goods amidst rising prices. The decline in credit income, particularly as the benefits from the co-brand card launch diminish, further adds to the pressure on Kohl’s financial performance. These factors contribute to Hutchinson’s decision to maintain a Sell rating, as the company’s prospects remain uncertain in the face of these challenges.
In another report released today, Barclays also maintained a Sell rating on the stock with a $8.00 price target.