Kohl’s Stock Lands in the Damaged Bin

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Wall Street has lost faith in

Kohl’s
,
given problems facing nearly all retailers and a potential deal that was scrubbed.

The department store chain (ticker: KSS) announced the morning of July 1 that it had ended buyout talks with Vitamin Shoppe-owner

Franchise Group

(FRG) and would continue as a standalone company. Hopes of a Kohl’s buyout had buoyed the stock in recent weeks. Without a suitor, Kohl’s shares tumbled 20% the day of the announcement.

Making matters worse, Kohl’s is going it alone just as retailers are seeing weakening consumer demand. The company warned that second-quarter sales would decline in the high-single digits, down from previous guidance for a low-single-digit drop.

Taken together, it’s no wonder that Kohl’s stock is off more than 40% this year. Even Kohl’s plans, often reiterated, to begin repurchasing $500 million of shares next month couldn’t placate investors. Analysts rushed last week to reduce the company’s ratings and price targets. Kohl’s declined to comment beyond its announcement.

Of course, Kohl’s isn’t the only retailer with troubles.

Bed Bath & Beyond

(BBBY) saw shares fall more than 30% in a week after posting a wider-than-expected loss and undergoing a management shakeup. Both Kohl’s and Bed Bath have been targeted by activist investors in recent years. Neither has seen lasting improvement.

Investors will get a formal chance to assess Kohl’s prospects when it reports earnings on Aug. 18.

Write to Carleton English at [email protected]