Kohl’s second-quarter results illustrate retail’s stark divide

Company said it expects pandemic to continue to hit its business.

Kohl’s Corp. posted a quarterly loss and declining sales Tuesday, a sign of the struggle of many retailers amid pandemic uncertainty.

The company’s second-quarter report contrasts sharply with the booming sales figures released Tuesday by Home Depot Inc. and Walmart Inc., two massive retailers that were deemed essential and allowed to operate through the pandemic.

Kohl’s and its nonessential peers, meanwhile, have struggled to regain sales as shoppers stay home and flock to e-commerce.

What happened

Kohl’s posted a loss of 25 cents a share when excluding some items — better than the estimated 70-cent loss. Sales were $3.2 billion — a decline of 23% from a year earlier but still above analyst expectations.

Kohl’s shares fell to as low as $20.26 on Tuesday, the lowest intraday in almost five months. The stock had declined 54% this year through Monday’s close.

The company said all of its stores reopened during the quarter, and it generated positive operating cash flow.

What it means

The results — and their contrast with Home Depot and Walmart — “underscore the discriminatory and uneven impact of the pandemic on retail,” Neil Saunders, managing director of GlobalData Retail, said in research note. The company’s sales decline “demonstrate that the recovery for some retailers will be prolonged and protracted.”

What’s next

Kohl’s has added curbside pickup and plexiglass barriers while requiring workers to wear masks, a bid to ease consumers’ nerves amid the COVID-19 pandemic.

Looking ahead, Kohl’s said it expects COVID-19 to continue to hit its business in the second half of the year and so it’s planning “conservatively.”

It also sees customers starting holiday shopping earlier, and it’s “prepared to chase any demand upside as it unfolds,” it said in slides accompanying the release.