Kohl’s Corp (KSS) warned shareholders that sales may decline in 2016, and doubted its ability to meet its $21 billion target for 2017. The retailer cited a decline in consumer spending and a weaker economy, which are dragging down its core categories, including apparel.
Meanwhile, Best Buy Co Inc. (BBY) forecasted that its current-quarter profit and sales would fail to meet analysts’ estimates. A decline in mobile device sales is dragging down the largest consumer electronics retailer in the U.S.
Shares for Kohl’s fell 1.9% on Thursday to $44.60. Shares for Best Buy dropped 3% on the news to $30.50.
Kohl’s plans on closing 18 underperforming stores in 2016, and projected its full-year sales to either fall or grow by just 0.5%.
Fourth-quarter sales for the company were affected by an unusually mild winter, which drove down sales of winter apparel, including boots and jackets. Kevin Mansell, Chief Executive, said it was “was very difficult to sell any cold weather apparel” in the fourth quarter. Kohl’s is considered one of the most weather-sensitive department store operators, and the company took a $20 million hit to sales after winter storm Jonas.
Kohl’s is forecasting earnings of $4.05-$4.25 per share for year, falling below analysts’ estimates of $4.24 per share.
Best Buy is forecasting a profit of $0.31-$0.35 per share on revenue of $8.25 billion to $8.35 billion in the first quarter. Analysts were expecting $0.39 per share and $8.45 billion in revenue. The company says it will buy back up to $1 billion in shares by 2018, and will issue a special dividend of $0.45 per share.
The company’s CFO, Sharon McCollam, expects declines in the first half of 2016, and growth to occur in the second half. Best Buy is targeting flat domestic revenue, but warns that it will be challenging without strong mobile device sales.
In the fourth quarter, sales at established stores dropped 1.7%. Analysts were only expecting a 1.3% decline.
Mobile device and computing sales were down 6.8% in the U.S., a category that accounts for 43% of Best Buy’s total revenue. The company’s net income dropped 7.7% to $479 million ($1.40 per share) in the fourth quarter.