Kohl’s pulls full-year profit forecast on economic volatility, CEO departure

Kohl’s Corp. withdrew its full-year profit forecast, citing a difficult macroeconomic environment and the unexpected departure of Chief Executive Officer Michelle Gass.

The retailer reiterated the preliminary third-quarter results it reported last week when it said Gass would step down, but declined to provide guidance for the current quarter in an earnings statement Thursday.

Kohl’s had cut its outlook in August, saying it expected no more than $3.20 a share in adjusted earnings this year, less than half the previous guidance.

The abandoned forecast deepens the uncertainty swirling around the discount department-store chain amid high U.S. inflation, which has made the company’s middle-income customers more price-conscious.

Kohl’s said it began to see more pronounced softness in late October and early November, which in part prompted its decision to pull its guidance.

“It’s really about the unpredictability and volatility in the trends over the last couple weeks,” Chief Financial Officer Jill Timm said on a conference call.

The shares seesawed after the open, rising 2% to $30.35 at 9:55 a.m. in New York after initially falling.

The stock tumbled 40% this year through Wednesday, compared with a 17% decline for the S&P 500 Index.

Kohl’s fell sharply on Wednesday after a gloomy report from Target Corp. dragged down other retailers.

Gass is leaving for the top job at Levi Strauss & Co. but will remain in the CEO role at Kohl’s through the end of November.

Board member and industry veteran Tom Kingsbury will serve as the interim chief while Kohl’s seeks a new leader.

Investors have urged the Menomonee Falls, Wisconsin-based company to sell itself after a long stretch of flagging sales.

Kohl’s has been trying to work through excess inventory that piled up because of a combination of sinking demand and over-ordering after last year’s shortages.

Inventories rose 34% in the third quarter from a year earlier, an improvement from 48% growth in the three-month period through July.

The retailer funded a $500 million share-repurchase program in August, and said it completed the plan earlier this month.

As Kohl’s reported last week, adjusted earnings fell to 82 cents a share in the third quarter, half the level of a year ago, while sales fell 7.2% to $4.05 billion.Comparable sales slid 6.9%.