Kohl's Amidst Inflation And Transition: An Analyst's Perspective On Declining Sales And Revenue

Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on the shares of Kohl's Corporation KSS, lowering the price target to $24 from $30.
Kohl's will report 1Q23 results on May 24 before the bell.
The analyst flags product cost inflation to remain a headwind through the first half of FY23, with the first quarter bearing the brunt of it.
The analyst remains particularly cautious about the unfavorable macro environment and strategic transitions, which cloud the visibility of nearer-term trends of the company.
These apart, management expects the promotional environment to remain competitive and wage inflation to be a potential headwind.
In 1Q23, the analyst forecasts a net sales decline of 5% Y/Y to $3.30 billion and a total revenue decrease of 4.9% to $3.54 billion.
In the quarter-to-be-reported, the analyst sees a 150 bps gross margin contraction to 36.8% vs. the consensus for 36.5%.
Taken together, the analyst forecasts an operating margin of 0.2% in the quarter, down 200 bps from. 2.2% last year.
Price Action: KSS shares are trading higher by 0.81% to $20.55 on the last check Thursday.
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