Jobless claims drop nationally

Applications for U.S. unemployment insurance fell for the first time in three weeks, suggesting demand for labor remains healthy.

Initial unemployment claims decreased by 2,000 to 250,000 in the week ended Aug. 13, Labor Department data showed Thursday.

The date is particularly scrutinized because it corresponds with the reference period for the government’s August employment report, which will be released early next month.

The median estimate in a Bloomberg survey of economists called for 264,000 applications.

Continuing claims for state benefits climbed to 1.44 million in the week ended Aug. 6, the highest since early April.

The drop in jobless claims points to still-healthy labor demand as companies try to attract and retain employees amid lingering worker shortages.

Even so, several employers have been laying off staff or freezing hiring amid economic uncertainty, which could continue as the Federal Reserve pursues an aggressive path of interest-rate hikes.

However, Fed officials are cautious of raising rates too much in their fight to tame decades-high inflation, according to the minutes of their July meeting released Wednesday.

They said the labor market remains strong, though jobless claims, which have generally been trending higher in recent months, point to some softening.

“A couple of participants indicated that firms were keen to retain workers – a factor that could limit the increase in layoffs associated with a slowing labor market,” policymakers said.

“Initial jobless claims for the week ended Aug. 13 declined slightly to 250k from 252k prior – a sizable downward revision from 262k as originally reported,” economist Eliza Winger wrote in a note for Bloomberg Economics.

“There was added volatility in July due to the annual auto-retooling period and associated difficulties in seasonally adjusting the data.”

Among some of the companies reducing staffing levels are Apple, crypto brokerage Genesis and Rapid Micro Biosystems.

The claims data can be choppy week-to-week, and the prior period was revised down notably.

The four-week moving average, which smooths out such swings, fell slightly to 246,750. That’s the first drop since early April.

Kohl’s earnings tank shares

Kohl’s shares sank after the company slashed full-year earnings and sales guidance for the second straight quarter as inflation suppresses demand and costs continue to climb.

The department-store chain expects earnings per share, excluding some items, in the range of $2.80 to $3.20. Kohl’s had already cut its forecast in May, telling investors to expect $6.45 to $6.85.

Net sales for the year are projected to decline 5% to 6%, Kohl’s said in a statement Thursday, down from an already lowered outlook of flat to up 1% this year.

Kohl’s is struggling as inflation elevates its costs and puts pressure on consumer budgets, though sales growth had been hard to come by even before the macroeconomic environment deteriorated.

On Thursday, the retailer said that middle-income shoppers had become more price-conscious, with some spending less per transaction, making fewer trips and shifting toward value brands.

“We have adjusted our plans, implementing actions to reduce inventory and lower expenses to account for a softer demand outlook,” Chief Executive Officer Michelle Gass said in a statement.

Kohl’s shares fell as much as 14% in premarket trading in New York.

The stock had already declined 31% this year through Wednesday.

From wire reportsInventories in the quarter ended July 30 rose 48% from a year ago because of lower sales and other factors, including investments to support the opening of 400 Sephora shops at Kohl’s locations in 2022.

The retailer has leaned on the LVMH-owned beauty company to drive sales and attract new customers. Excluding the additional items, inventories increased 27%.

Not everyone is persuaded that inflation is at fault.

The main sources of Kohl’s woes are internal, said Neil Saunders, a U.S.-based analyst at consulting company GlobalData.

“The company has lost the plot in terms of merchandising and range planning and appears to be taking a seemingly random approach to buying,” Saunders said in an email.

Meanwhile, gross margin decreased 2.9 percentage points in the quarter because of freight costs, product inflation and higher promotions.

The closely watched metric of same-store sales fell 7.7%. Analysts were looking for a 7.4% decline, according to the average of five estimates compiled by Bloomberg.

Kohl’s has faced intense activist pressure to sell itself after a long stretch of flagging sales.

The board recently took the company off the market after it failed to agree on a potential $8 billion deal, only two months after fending off an attempt by investor Macellum Capital Management to overhaul the board.