Don't Get on the Kohl's Bus

July is an important month for retailers, because it's the start of the back-to-school period. That's right, parents -- your little ones will be out of your hair soon! And retailers such as Kohl's (NYSE: KSS  ) will be looking for your back-to-school business. But if you had any thoughts about investing in Kohl's, you might not want to jump on the bus so quickly. Its comps just aren't making the grade.

Same-store sales were flat compared with a year ago. That's disappointing, and it follows the same pattern as last month's results. It's nice that the company reiterated its earnings guidance for the quarter -- which I'll be reporting on later this week -- but improved sales would be even better.

Seasonal items, such as shorts and T-shirts, are doing poorly, but early results for back-to-school look promising. Don't get your hopes up too high this early, though. "Promising" has a way of turning into "disappointing" mighty fast.

Despite headwinds such as high gas and food prices, not to mention higher borrowing costs, Kohl's is facing company-specific issues. In particular, it runs confusing sales at its stores. Based on personal experience, I can report that it has the annoying habit of running sales earlier than announced. I've had the pleasurable experience of being dragged to the store by my better half, only to find out the item on sale for is out of stock. J.C. Penney (NYSE: JCP  ) used to do the same thing, before righting itself. J.C. Penney, by the way, reported an 11% jump in same-store sales this month. Others did well, too, including Target (NYSE: TGT  ) and its nice 6.1% rise in comps.

You must be asking yourself -- along with everyone else -- how the company is going to meet its earnings target, in the face of disappointing sales. My guess is that we will see share buybacks and possible cost-cutting. The company already has a lower share count, so I'll bet it accelerated some of its cuts to this quarter. Now if only the company could get its promotions right and stop alienating its customers, it will be able to put up the kind of numbers we just saw at J.C. Penney.

Related Foolishness:

• Dressing Down Retail
• Foolish Forecast: Can Investors Count on Kohl's?

Have you tried Stock Advisor on for size yet? The Fool's flagship newsletter service is beating the market, and it's chock-full of recommendations that will flatter your portfolio. Right this way to a 30-day free trial.

Fool contributor Larry Rothman is happy to receive feedback, and he promises to read it when he's not being wrestled by his three children. Feel free to email him at rothmanviews@comcast.net. He doesn't have any positions in the companies mentioned.