Kohl’s “is a business whose time has passed,” says the analyst

Kohl’s (KSS) is bordering on insignificant and could remain so for years to come, a veteran retail analyst has warned.

“Kohl’s is a company whose time has passed,” J Rogers Kniffen Worldwide CEO Jan Rogers Kniffen said on Yahoo Finance Live (video above). “They were the rising star all through the ’80s, ’90s and into 2000, and at that point they had 1,150 stores in a space that probably only needed 750. Since then they have matured and struggled. “

Those struggles were evident in Kohl’s third-quarter results, which were released on Thursday.

ROCKFORD, ILLINOIS - MARCH 24: The parking lot in front of Kohl's store at Forest Plaza is almost deserted on March 24, 2020 in Rockford, Illinois.  Forest Plaza is a shopping mall with more than 30 stores, most of which have been closed as state residents deal with a stay-at-home order to curb the spread of COVID-19.  (Photo by Scott Olson/Getty Images)

The parking lot in front of the Kohl’s store at Forest Plaza on March 24, 2020 in Rockford, Illinois is almost deserted. (Photo by Scott Olson/Getty Images)

Comparable same-store sales fell 6.9% in the quarter as consumers pulled away from durable goods like apparel, while adjusted operating profits fell 50% year over year.

The company’s inventory rose $1.2 billion year-over-year as sales fell and product lines underperformed, prompting Kohl’s to act aggressively to liquidate unsold product. In turn, Kohl’s gross profit margin fell 260 basis points year over year.

Kohl’s continued to withdraw its full-year guidance due to operational issues and economic uncertainty ahead of the peak holiday shopping season.

Kohl’s shares were up more than 2% as of Thursday afternoon.

The retailer is currently looking for a new CEO after the departure of embattled leader Michelle Gass.

Gass, who joins Levi’s, has come under fire from several activist investors for poor operational performance. Additionally, earlier this year, Gass and the board botched a sale process that has resulted in billions in lost shareholder value.

Kohls get “no help at the moment,” Kniffen said. “We saw what happened [JC Penney], and Kohl’s and Penney’s were in the same room. There was a lot of market share to gain there, and Kohl’s didn’t take it because they just weren’t doing a good job.

“I think the other part of the problem is that they’re just not a growth company anymore,” Kniffen added, “and they won’t be.”

Brian Soci is a freelance editor and Anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and further LinkedIn.

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