BofA Downgrades Kohl's On Supply Chain Issues

Supply chain issues may adversely impact the sales recovery at Kohl's Corporation KSS and offset the progress on women’s category as well as the benefit associated with the new Sephora locations, according to BofA Securities.

The Kohl's Analyst: Lorraine Hutchinson downgraded Kohl's from Buy to Underperform, while reducing the price target from $75 to $48.

The Kohl's Thesis: Kohl’s Active and women’s private label businesses face “a high risk of delayed receipts and stock outs,” Hutchinson said in the note.

“While lower receipts mean less clearance, which is good for margins, we believe the sales headwind will be difficult to offset,” he added.

The analyst reduced the earnings estimates for both fiscal 2021 and 2021 by 30 cents per share to $5.79 per share and by $1.11 per share to $5.36 per share, respectively.

“We see the biggest risk to consensus in 1H22 and our F22 estimate is 10% below consensus. The stock is relatively inexpensive but with declining estimates, we see downside,” Hutchinson wrote.

KSS Price Action: Shares of Kohl’s had tumbled 12.04% to $47.21 at the time of publication Thursday.