The Kohl’s logo is displayed on the exterior of a Kohl’s store on January 24, 2022 in San Rafael, California.
Justin Sullivan | Getty Images
Kohl’s on Thursday named interim CEO Tom Kingsbury to the post on a permanent basis.
He took over as interim CEO in December after former chief executive Michelle Gass decided to leave for Levi Strauss. Kingsbury’s appointment had been expected.
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The company also said activist investor Macellum Advisors agreed to back off its pressure campaign.
“The Board appreciates our constructive dialogue with Macellum during the last few months and their engagement as we conducted the CEO search process. We look forward to their continued support and partnership,” said Michael Bender, a board director at Kohl’s.
In October, Macellum had been pushing for board seats at the struggling retailer.
Shares of Kohl’s were little changed in after-hours trading on Thursday.
Read the full release from Kohl’s.
This is breaking news. Please check back for updates.
Self-checkout arrived in the late 1980s at supermarkets. A decade later, it began spreading to big-box chains and drug stores. Now, self-checkout, loved by some and hated by others, has entered discount clothing and department stores.
Kohl’s
(KSS) is testing self-checkout stations at a handful of stores. H&M added them at three stores and plans to roll the program out to more than 30 stores by the end of next year. Bed Bath & Beyond
(BBBY) first tried self-checkouts at its flagship in New York City last year and has since added them to several locations. Zara has it at 20 of its largest US stores.
Plus Uniqlo, Primark and other chains have started to roll out self-checkout machines at some of their stores.
These retailers are beginning to adopt self-checkout for a variety of reasons, including labor savings, customer demand and improvements to the technology.
Labor is one of the largest expenses for stores, and they are trying to save money as costs rise and more shoppers buy online. Self-checkout transfers the work of paid employees to unpaid customers.
Self-checkout stations eliminate some of the need for human cashiers, which is why retail unions typically oppose the technology. The number of cashiers in the retail industry is expected to decline by 10% over the next decade, in part due to the rise of self-checkout, according to the Bureau of Labor Statistics.
These stores are also responding to customers who prefer self-checkout and perceive it to be faster and more convenient than checking out through a traditional cashier. Millions of customers used self-checkout for the first time during the Covid-19 pandemic to minimize close interactions with workers and other shoppers, and got accustomed to the technology.
But these companies’ attempts to bring self-checkout to stores come with risks, including irritated customers and more shoplifting.
According to a survey last year of 1,000 shoppers, 67% said they’d experienced a failure at a self-checkout lane. Errors at the kiosks are so common that they have even led to dozens of memes and TikTok videos of customers complaining of “unexpected item in the bagging area” alerts.
Customers make honest errors scanning barcodes as well as intentionally steal items at unstaffed self-checkout stands.
“It does present some real challenges,” said Adrian Beck, an emeritus professor at the University of Leicester and retail industry consultant who researches self-checkout. Retail losses are higher at self-checkout stations than at staffed checkout, Beck has found.
Traditionally, clothing and department stores have relied on hard security tags on merchandise to prevent shoplifting. This is a problem for self-checkout: customers aren’t used to removing security tags themselves, and most self-checkout machines aren’t equipped to do so.
To get around this, some apparel stores are using wireless “radio frequency identification” security tags, known as RFID, on merchandise instead of hard tags.
Stores such as Uniqlo have invested in new self-checkout machines that automatically recognize these tags, eliminating the need for customers to scan any products themselves or remove security tags. Customers simply drop their merchandise in a designated box at the self-checkout station and the machine automatically identifies the item and displays the price on a screen.
The spread of self-checkout to budget-oriented clothing and department stores has other impacts, too.
It entrenches a divide in retail where one segment of customers gets better service than others, said Christopher Andrews, a sociologist at Drew University and author of “The Overworked Consumer: Self-Checkouts, Supermarkets and the Do-It-Yourself Economy.”
Although shoppers of all incomes visit these stores, it’s unlikely that luxury brands will have customers do “quasi-forced unpaid work under surveillance,” Andrews said.
“Is this an early glimpse of a future where the affluent get in-person service and the working classes are required to perform free work to get their food and clothing?”
Check out the companies making the biggest moves midday.
Walmart — Shares of retailer Walmart jumped more than 7% after reporting quarterly earnings that beat Wall Street’s expectations and raising its forward guidance. The company reported adjusted earnings per share of $1.50 on $152.81 billion in revenue, where analysts expected adjusted earnings per share of $1.32 and $147.75 billion in revenue, per Refinitiv.
Retail stocks — Retail stocks rose following Walmart and Home Depot‘s stronger-than-expected financial reports for the third quarter. Home Depot rose 1%, while Target shares rallied more than 3%. Kohl’s and Bed Bath & Beyond added roughly 3%. Macy’s and Nordstrom advanced about 5% and 3%, respectively.
Taiwan Semiconductor — Shares of the Taiwanese chipmaker soared more than 12% after Warren Buffett’s Berkshire Hathaway built a $4 billion new stake in the company. Berkshire added more than 60 million shares of the Taiwanese chipmaker’s American depositary receipts, by the end of the third quarter, making Taiwan Semi the conglomerate’s 10th biggest holding at the end of September.
Paramount Global — Shares of the media company jumped more than 9% after a filing revealed that Berkshire Hathaway increased its holding to $1.7 billion at the end of the third quarter. Paramount is still down more than 30% this year as it suffered from cord cutting and a drop in advertising revenue.
Louisiana-Pacific — The lumber maker saw its stock jump more than 10% after Omaha-based Berkshire took new positions in the company last quarter. The conglomerate’s stake was worth $297 million at the end of September.
Bath & Body Works — Bath and Body Works rose 4% after an SEC filing revealed that Dan Loeb’s Third Point bought $265 million in the retailer’s stock in the third quarter.
Netflix — The streaming giant added 3.8% after Bank of America double-upgraded the stock to a buy from underperform. He said the new ad tier and crackdown on password sharing could help the stock’s value increase 23.6%.
Fulcrum Therapeutics — Shares of the biotechnology company gained 8.6% after Goldman Sachs initiated coverage of the stock as a buy and said it could see an upside of 61.5% if its main experimental drugs kept performing well.
Vodafone — Vodafone’s stock dropped 6.8% after the company cut its earnings guidance and cash flow forecast. The mobile operator cited a challenging economic environment.
Getty Images — Getty Images’ stock plummeted 12% after revenue for the recent quarter missed Wall Street’s expectations.
Albemarle — Shares of the lithium miner dropped 6%. Rumors that an unnamed Chinese cathode manufacturer was cutting its production targets was putting pressure on U.S. lithium stocks, according to FactSet.
Signature Bank — Shares of the crypto bank jumped more than 10% after Signature reported minimal exposure to FTX and any potential destruction that could come from its collapse. Signature said it has only a deposit relationship with the exchange — it does not lend crypto or invest in it on behalf of clients — representing less than 0.1% of its overall deposits.
Mobileye Global — The autonomous vehicle systems software company rallied 4% after Baird initiated coverage of the stock with an outperform rating. Analyst Luke Junk called Mobileye a market leader, writing, “Net, we recommend purchase/would lean into any volatility, for this premier franchise/longer-term optionality.”
Sunnova Energy — Shares of solar company rose 7.5% after Deutsche Bank initiated coverage of Sunnova Energy, First Solar and Enphase Energy with buy ratings. First Solar was up 3.2%, and Enphase Energy rose 2%.
Capital One Financial — The regional bank’s stock sank 5% after it was downgraded by Bank of America to neutral from buy. Analyst Mihir Bhatia also cut his price target to $113 per share from $124.
Carnival — Shares of the cruise operator rose 6% after another report hinted inflation could be slowing. Royal Caribbean Cruises and Norwegian Cruise Line were also higher, up 4.9% and 2.5% respectively.
Chinese stocks — Chinese companies listed on the U.S. stock market rose following President Joe Biden’s meeting with China President Xi Jinping and despite disappointing retail sales data. Tencent Music Entertainment, which also posted beats on the top and bottom lines,soared about 30%. Alibaba rose roughly 12%. Pinduoduo and Baidu both rallied about 10%, and JD.com rose nearly 8%.
— CNBC’s Yun Li, Carmen Reinicke, Alex Harring, Samantha Subin and Tanaya Macheel contributed reporting.
Check out the companies making headlines before the bell:
Delta Air Lines (DAL) – The airline’s stock rose 3.9% in the premarket on the strength of an upbeat current-quarter forecast as travel demand continues to rebound. For its most recent quarter, Delta earned an adjusted $1.51 per share, a number that was 2 cents below consensus but included a 3-cent impact from the effects of Hurricane Ian.
Walgreens (WBA) – Walgreens rallied 6.8% in the premarket after the drugstore operator reported better-than-expected quarterly profit and revenue. The company also raised its long-term sales targets.
Applied Materials (AMAT) – Applied Materials lowered its current-quarter revenue outlook, with the chip manufacturing equipment maker saying it would be negatively impacted by new U.S. regulations restricting exports to China. Applied Materials lost 2% in premarket action.
Victoria’s Secret (VSCO) – Victoria’s Secret gained 3.1% in premarket trading after the lingerie maker said current quarter sales and profit would come in at the high end of prior forecasts. The upbeat forecast comes ahead of a meeting with analysts and investors scheduled for Thursday.
Digital World Acquisition (DWAC) – Digital World Acquisition surged 11.2% in the premarket after Google approved Truth Social – the social media platform backed by former President Donald Trump – for inclusion in its app store. Digital World is the special purpose acquisition company that plans to merge with Truth Social and take it public, though shareholders have yet to approve the merger.
Dish Network (DISH) – Dish gained 1% in premarket action after blank-check firm CONX Corp. said it was in talks to buy Dish’s retail wireless unit Boost Mobile. CONX is backed by Dish Network chairman Charles Ergen.
Taiwan Semiconductor (TSM) – Taiwan Semi rose 2.3% in the premarket after the chip maker reported an 80% jump in quarterly profit and on reports that the U.S. granted Taiwan Semi a one-year license to continue ordering U.S. equipment for use in China.
Kohl’s (KSS) – Kohl’s gained 2.2% in premarket trading following a Wall Street Journal report that activist investor Macellum Advisors is warning the retailer that another proxy battle could be ahead. Macellum is said to be calling for the replacement of at least three directors after talks to sell the retailer earlier this year collapsed.
A Walmart employee loads up a robotic warehouse tool with an empty cart to be filled with a customer’s online order at a Walmart micro-fulfillment center in Salem, Mass. on Jan. 8, 2020.
Boston Globe | Boston Globe | Getty Images
When the economy slows down, the classic response for consumer businesses is to cut back: slow hiring, maybe lay off workers, slash marketing, or even slow the pace of technology investment, delaying projects until after business has picked up again.
But that’s not at all what America’s troubled retail sector is doing this year.
With the S&P Retail Index down nearly 30% this year, most of the industry is boosting investment in capital spending by double digits, including industry leaders Walmart and Amazon.com. Among the top tier, only struggling clothier Gap and home-improvement chain Lowe’s are cutting back significantly. At electronics retailer Best Buy, first-half profits fell by more than half – but investment rose 37 percent.
“There is definitely concern and awareness about costs, but there is a prioritization happening,” said Thomas O’Connor, vice president of supply chain-consumer retail research at consulting firm Gartner. “A lesson has been taken from the aftermath of the financial crisis,” O’Connor said.
That lesson? Investments made by big-spending leaders like Walmart, Amazon and Home Depot are likely to result in taking customers from weaker rivals next year, when consumer discretionary cash flow is forecast to rebound from a year-long 2022 drought and revive shopping after spending on goods actually shrank early this year.
After the 2007-2009 downturn, 60 companies Gartner classified as “efficient growth companies” that invested through the crisis saw earnings double between 2009 and 2015, while other companies’ profits barely changed, according to a 2019 report on 1,200 U.S. and European firms.
Companies have taken that data to heart, with a recent Gartner survey of finance executives across industries showing that investments in technology and workforce development are the last expenses companies plan to cut as the economy struggles to keep recent inflation from causing a new recession. Budgets for mergers, environmental sustainability plans and even product innovation are taking a back seat, the Gartner data shows.
Today, some retailers are improving how supply chains work between the stores and their suppliers. That’s a focus at Home Depot, for example. Others, like Walmart, are driving to improve in-store operations so that shelves are restocked more quickly and fewer sales are lost.
The trend toward more investment has been building for a decade, but was catalyzed by the Covid pandemic, Progressive Policy Institute economist Michael Mandel said.
“Even before the pandemic, retailers were shifting from investments in structures to active investments in equipment, technology and software,” Mandel said. “[Between 2010 and 2020], software investment in the retail sector rose by 123%, compared to a 16% gain in manufacturing.”
At Walmart, money is pouring into initiatives including VizPick, an augmented-reality system linked to worker cell phones that lets associates restock shelves faster. The company boosted capital spending 50% to $7.5 billion in the first half of its fiscal year, which ends in January. Its capital spending budget this year is expected to rise 26 percent to $16.5 billion, CFRA Research analyst Arun Sundaram said.
“The pandemic obviously changed the entire retail environment,” Sundaram said, forcing Walmart and others to be efficient in their back offices and embrace online channels and in-store pickup options even more. “It made Walmart and all the other retailers improve their supply chains. You see more automation, less manual picking [in warehouses] and more robots.”
Last week, Amazon announced its latest warehouse robotics acquisition, Belgian firm Cloostermans, which offers technology to help move and stack heavy palettes and goods, as well as package products together for delivery.
Home Depot’s campaign to revamp its supply chain has been underway for several years, O’Connor said. Its One Supply chain effort is actually hurting profits for now, according to the company’s financial disclosures, but it’s central to both operating efficiency and a key strategic goal – creating deeper ties to professional contractors, who spend far more than the do-it-yourselfers who have been Home Depot’s bread and butter.
“To serve our pros, it’s really about removing friction through a multitude of enhanced product offerings and capabilities,” executive vice president Hector Padilla told analysts on Home Depot’s second-quarter call. “These new supply chain assets allow us to do that at a different level.”
The store of the future for aging retail brands
Some broadline retailers are more focused on refreshing an aging store brand. At Kohl’s, the highlight of this year’s capital spending budget is an expansion of the firm’s relationship with Sephora, which is adding mini-stores within 400 Kohl’s stores this year. The partnership helps the middle-market retailer add an element of flair to its otherwise stodgy image, which contributed to its relatively weak sales growth in the first half of the year, said Landon Luxembourg, a retailing expert at consulting firm Third Bridge. First-half investment more than doubled this year at Kohl’s.
Roughly $220 million of the increase in Kohl’s spending was related to investment in beauty inventory to support the 400 Sephora shops opening in 2022, according to chief financial officer Jill Timm said. “We’ll continue that into next year. …We’re looking forward to working with Sephora on that solution to all of our stores,” she told analysts on the company’s most recent earnings call in mid-August.
Target is spending $5 billion this year as it adds 30 stores and upgrades another 200, bringing its tally of stores renovated since 2017 to more than half of the chain. It also is expanding its own beauty partnership first unveiled in 2020, with Ulta Beauty, adding 200 in-store Ulta centers en route to having 800.
And the biggest spender of all is Amazon.com, which had over $60 billion in capital expenditures in 2021. While Amazon’s reported capital spending numbers include its cloud computing division, it spent nearly $31 billion on property and equipment in the first half of the year — up from an already record breaking 2021 — even though the investment made the company’s free cash flow turn negative.
That is enough to make even Amazon tap the brakes a little bit, with chief financial officer Brian Olsavsky telling investors Amazon is shifting more of its investment dollars to the cloud computing division. This year, it estimates roughly 40% of spending will support warehouses and transportation capacity, down from last year’s combined 55%. It also plans to spend less on worldwide stores — “to better align with customer demand,” Olsavksy told analysts after its most recent earnings — already a much smaller budget item on a percentage basis.
At Gap — which has seen its shares declined by nearly 50% this year — executives defended their cuts in capital spending, saying they need to defend profits this year and hope to rebound in 2023.
“We also believe there’s an opportunity to slow down more meaningfully the pace of our technology and digital platform investments to better optimize our operating profits,” chief financial officer Katrina O’Connell told analysts after its most recent earnings.
And Lowe’s deflected an analyst’s question about spending cuts, saying it could continue to take market share from smaller competitors. Lowe’s has been the better stock market performer compared to Home Depot over the past one-year and year-to-date periods, though both have seen sizable declines in 2022.
“Home improvement is a $900 billion marketplace,” Lowe’s CEO Marvin Ellison said, without mentioning Home Depot. “And I think it’s easy to just focus on the two largest players and determine the overall market share gain just based on that, but this is a really fragmented marketplace.”
Check out the companies making the biggest moves midday:
Cisco Systems — Shares of the networking equipment producer jumped 5.8%. The company reported earnings after the bell on Wednesday that beat estimates. Cisco also provided a better-than-expected forecast for 2023.
Bed Bath & Beyond — The latest favored meme stock, which has surged in August, dropped over 20%. Investors appeared to be reacting to activist investor Ryan Cohen’s filing that he intends to sell his entire stake in the company.
Kohl’s — Kohl’s shares sank about 5% after the retailer slashed its financial forecast for the year, citing inflation pressures on middle-income customers. The company expects net sales in fiscal 2022 down 5% to 6%, down from a prior range of flat to up 1%. However, Kohl’s beat analysts’ expectations for fiscal second-quarter profit and revenue.
BJ’s Wholesale — Shares of the club retailer popped more than 7% on Thursday after BJ’s reported better-than-expected results for the second quarter. The company generated $1.06 in adjusted earnings per share on $5.01 billion of revenue. Analysts surveyed by FactSet were expecting 80 cents per share on $4.67 billion of revenue. The company’s comparable sales rose 7.6% year over year, excluding gasoline. BJ’s was also upgraded by Bank of America to a buy from neutral.
Elanco Animal Health — Shares of Elanco shed more than 3% after the company was downgraded by Morgan Stanley. The firm shifted the stock to equal weight from overweight citing concerns about future profits.
Verizon — Shares of Verizon slipped 2.7% after MoffettNathanson downgraded it to underperform and slashed its price target. Increased competition from AT&T and T-Mobile is weighing on Verizon and will likely drag shares lower, analysts said.
Canadian Solar — The solar equipment and services company hit a new 52-week high, popping nearly 18%, after reporting quarterly profits that beat expectations. Canadian Solar also raised its full-year revenue forecast and reported solar module shipments that were at the high end of its forecast.
Wolfspeed — Shares surged more than 27% after the semiconductor company surpassed expectations in its most recent earnings report. Wolfspeed CEO Gregg Lowe said he remains “very encouraged about the industry’s prospects for future growth and the activity we are seeing across our end-markets.”
Walgreens Boots Alliance — Shares of Walgreens fell more than 5% in midday trading. The drugstore chain, along with CVS and Walmart, was ordered Wednesday by a federal judge to pay a combined $650.6 million to two Ohio counties to address damage done by the opioid crisis. Walgreens also announced Wednesday it had sold 11 million shares of Option Care Health’s common stock in an underwritten secondary offering.
Energy stocks — Energy stocks were buoyed by the rise in oil prices, with shares of Devon Energy rising more than 3%. Halliburton jumped 4%, and APA added more than 5%. Exxon Mobil and Occidental Petroleum and both gained about 2%.
—CNBC’s Jesse Pound, Carmen Reinicke and Sarah Min contributed reporting.
In 2020, Macy’s opened its first Market by Macy’s location, which was in the Dallas-Fort Worth area.
Source: Macy’s
Macy’s is accelerating its plans to open smaller stores that aren’t attached to suburban shopping malls, in a bid to evolve along with its customers’ shopping preferences coming out of the Covid pandemic.
The department store chain said Wednesday that it will open three stores this fall that each represent ways Macy’s is thinking about how it aims to reposition its real estate in the future. That includes:
Combining some of its different businesses under one roof
Closing one of its department stores at a traditional mall to open a smaller-format Macy’s store, known as The Market by Macy’s, in a more densely populated part of town nearby
Adding another Market by Macy’s location in an area where it already has multiple of those shops
“We want to be convenient and we want to make it easy,” Marc Mastronardi, Macy’s chief stores officer, said in an interview. “Customer behavior just keeps changing. And the more that we have the agility as an organization to shift and react, this feels like the next natural evolution.”
This fits into a broader strategy that Macy’s laid out to investors in February 2020, shortly before Covid-19 cases began to ramp up in the United States. At the time, the company said it planned to shutter 125 stores in lower-tier malls within three years and would explore formats outside of malls.
Since then, Macy’s has opened five stores under the Market by Macy’s banner, which are about one-fifth of the size of its full-line locations and tout services such as buy online, pick up in store. It will reach eight by the end of this year.
Going small and getting away from the mall has become somewhat of a trend in the retail industry. It’s a blueprint that retailers from Gap to Nordstrom have been following. Kohl’s also said it’s aiming to open 100 smaller-footprint locations over the next four years. Macy’s last year opened its first pint-sized Bloomingdale’s shop, called Bloomie’s.
Read more retail coverage
Some of America’s malls have lost appeal – and tenants – as consumers nowadays tend to seek a quick and convenient shopping experience. Shoppers are also much less interested in spending hours browsing sprawling, multilevel shops, leading retailers to test slimmed-down versions.
“There are malls that are underperforming and this is an opportunity to get into a market in the right spot and in a new format,” said Mastronardi.
This fall, Macy’s will open its first-ever dual Market by Macy’s and Macy’s Backstage store, which is a competitor to off-price chains including T.J. Maxx, in the Chicago metropolitan area.
Second, it plans to shutter one of its mall-anchored department stores in the Chesterfield area of St. Louis in order to open a smaller Market by Macy’s location nearby, in an open-air strip mall known as Chesterfield Commons.
And third, Macy’s will open a Market by Macy’s store in Johns Creek Town Center, in Suwanee, Georgia, marking its third such location in the metro-Atlanta area.
Mastronardi said the Atlanta market has proven to be a place where people show an affinity for the Macy’s brand, and it’s also a highly trafficked area, giving Macy’s a reason to have a beefed-up presence.
He also said Macy’s customers are spending three times more online, on average, in markets where the retailer also has bricks-and-mortar stores.
“When we can be near a customer with a physical format our digital business is significantly better,” he said.
Macy’s counted 511 of its namesake locations, 55 Bloomingdale’s stores and 160 Bluemercury makeup shops, as of April 30.
Prime Day prices may not be Amazon’s best-ever offer
Just because something is discounted on Prime Day doesn’t mean it’s the best deal you’ll see anywhere, or even all year.
Naturally, Amazon will offer the best prices on its own gear like the Kindle, Fire TV streamer and private-labelclothing. For example, the e-commerce giant is already advertising a 24-inch Fire TV for only $90, nearly half the retail price, while other early deals include up to 55% off the second-generation Echo Show, Kindle Paperwhite and Eero Mesh Wi-Fi routers.
Keep in mind that some items will be reduced further down the road. Prices on mattresses and outdoor furniture are likely to be lower around Labor Day, toys get marked down the most on Black Friday and Cyber Monday, and TVs generally hit their lowest price point ahead of Super Bowl Sunday.
Even Amazon is looking beyond its own Prime Day with a second sales event now slated for the fall.
Competing sale events are upping the ante
Other bargains are not exclusive to Amazon at all. Walmart, Target and Best Buy, among others, are holding competing deals events — as they have in previous years — to coincide with Amazon Prime Day 2022.
This time, Target’s 72-hour “Deal Days” kicks off earlier and runs for longer, starting on July 11, one day ahead of Prime Day. Plus, Target will price match select Prime Day deals and take an additional 5% off for RedCard members.
“Every year, they become a little bit more competitive,” Burrow said.
Also expect to find equally worthwhile deals at Walmart on kitchen appliances, vacuums and Nintendo Switch accessories, he said, and count on Best Buy to compete on electronics and Apple devices.
Meanwhile, other retailers, including Bed, Bath & Beyond, Kohl’s, Overstock, Samsung and Saks Fifth Avenue, will offer their own major markdowns, according to Rakuten’s retail and shopping expert Kristen Gall.
How to make sure you’re getting the best deals
To find the lowest prices overall, start crunching the numbers now, advised Kristin McGrath, a shopping expert at RetailMeNot.
Price trackers are the easiest way to monitor just how good a deal really is, especially for big-ticket items.
Kristin McGrath
shopping expert at RetailMeNot
McGrath recommends a price-tracking browser extension like Camelcamelcamel or Keepa to keep an eye on price changes and get price-drop alerts. “Price trackers are the easiest way to monitor just how good a deal really is, especially for big-ticket items,” she said.
At some retailers, you can even stack deals by using a promo code or digital coupon and then pay with a rewards credit card for extra savings, said Rakuten’s Gall.
Check out the companies making headlines before the bell:
Kohl’s (KSS) – Kohl’s tumbled 17.9% in premarket trading after the retailer confirmed an earlier CNBC report that it ended talks to be bought by Vitamin Shoppe parent Franchise Group (FRG). Kohl’s said the deteriorating retail and financial environment presented significant obstacles to concluding a deal. It also cut its current-quarter outlook amid more cautious consumer spending.
Micron Technology (MU) – Micron slid 4.6% in the premarket despite reporting a better-than-expected quarterly profit. The chip maker’s shares came under pressure due to a lower-than-expected sales outlook, stemming from weakening overall demand.
Apple (AAPL) – J.P. Morgan Securities analyst Samik Chatterjee reiterated an “overweight” rating on Apple, saying he is not as worried about Apple’s prospects as others. The firm has a December price target of $200 per share, $46 higher than its Thursday close.
China-based electric vehicle makers – Li Auto (LI) delivered 13,024 vehicles in June, a 69% year-over-year increase for the China-based electric vehicle maker. Rival Xpeng (XPEV) delivered 15,295 vehicles in June, a 133% jump from a year earlier. Nio (NIO) delivered 12,961 vehicles in June, up 60% from a year ago. Li Auto added 1.7% in premarket action, Xpeng rose 2.1%, and Nio gained 1.8%.
Meta Platforms (META) – The Facebook parent is slashing hiring plans and bracing for an economic downturn. In an employee question-and-answer session heard by Reuters, CEO Mark Zuckerberg said it might be “one of the worst downturns we’ve seen in recent history”.
Caesars Entertainment (CZR), MGM Resorts (MGM) – The resort operators reached tentative contract agreements with Atlantic City casino workers, avoiding what might have been a costly strike during the busy July 4th holiday weekend.
FedEx (FDX) – FedEx lost 2.1% in the premarket after Berenberg downgraded the stock to “hold” from “buy”, pointing to near-term earnings risks which could halt a recent rally in the stock.
Coupang (CPNG) – The South Korean e-commerce company saw its stock rise 1.7% in the premarket after Credit Suisse upgraded it to “outperform” from “neutral”. The firm feels Coupang’s bottom-line turnaround prospects are underappreciated by investors.
Kohl’s is terminating talks to sell its business to The Vitamin Shoppe owner Franchise Group, two people familiar with the matter told CNBC on Thursday.
The people requested anonymity because a decision from Kohl’s has not been publicly announced.
Representatives from Kohl’s and Franchise Group didn’t immediately respond to CNBC’s requests for comment.
This decision from Kohl’s comes as its stock price slumps and its sales decline. It has faced months of pressure from activist investors to pursue a sale and shake up the business with a new slate of board directors. It wasn’t immediately clear what path Kohl’s would take next.
Financing such a deal has also become more difficult due to volatility in the stock market and broader economy, as the Federal Reserve jacks up interest rates to counter surging inflation. Walgreens Boots Alliance earlier this week scrapped its plan to sell its U.K. pharmacy chain, Boots, saying no third party was able to make an adequate offer due to turmoil in the global financial markets.
Franchise Group had been weighing lowering its bid for Kohl’s to closer to $50 per share from about $60, CNBC reported last week, citing a person familiar with the matter. The shift in thinking came as the outlook for the retail industry grew increasingly grim, the person said, as fears of a recession mounted.
Franchise Group in early June proposed a bid of $60 per share to acquire Kohl’s at a roughly $8 billion valuation. The two companies then entered an exclusive three-week window during which they can firm up any due diligence and final financing arrangements. That ran its course this past weekend.
Kohl’s shares closed Thursday at $35.69. At one point during the day the stock touched a 52-week low of $34.33. Kohl’s ended the day with a market valuation of roughly $4.6 billion, its shares down about 28% so far this year.
Kohl’s earlier this year received a per-share offer of $64 from Starboard-backed Acacia Research, but it deemed the bid to be too low.
Activist firm Macellum Advisors has been pushing for Kohl’s to consider a sale or consider other strategic alternatives since January. Macellum was also arguing for Kohl’s to revamp its slate of directors, arguing the retailer, under Chief Executive Officer Michelle Gass, has underperformed in recent years compared with its peers.
Macellum didn’t immediately respond to a request for comment.
In mid-May, however, Kohl’s shareholders voted to reelect the company’s current slate of 13 board directors, thereby defeating Macellum’s proposal.
In recent weeks, the outlook for the retail industry has grown bleaker as consumers pull back their spending on certain discretionary categories, such as home goods and apparel, amid inflation and the threat of an economic slowdown.
High-end furniture chain RH on Wednesday cut its forecast for revenue in fiscal 2022, anticipating softer consumed demand for its products in the back half of the year. Bed Bath & Beyond saw its sales plummet in its most recent quarter and ousted its CEO.
Companies are also seeing inventories pile up as shipments of goods arrive later than planned, due to supply chain snags. Big-box retailer Target in early June warned investors that its profits will take a short-term hit, as it marks down unwanted items, cancels orders and takes aggressive steps to get rid of extra inventory.
Kohl’s sales for the three-month period ended April 30 fell to $3.72 billion from $3.89 billion in 2021. When it reported these figures in mid-May, the retailer also slashed its profit and revenue forecasts for the full fiscal year, further muddying the picture for a potential deal.
