Despite gains in the broad market today, Kohl's (NYSE:KSS) shares were sliding as the company's prospects continued to dim in the face of the coronavirus outbreak.
This afternoon, the department store chain said its stores will be closed until further notice, extending a prior store closure announcement, and it announced a number of other decisions to shore up its financial position and liquidity while stores are closed.
The stock finished the day down 8.7%.
Like many of its retail peers , Kohl's said it would do the following:
- Slash capital expenditures by $500 million for the year.
- Scale back inventory in line with lower anticipated sales.
- Significantly cut back on expenses, including marketing, technology, and operations, while stores are closed.
- Temporarily suspend share repurchases and re-evaluate its dividend program.
- Draw down its $1 billion credit facility.
Kohl's also said it would temporarily furlough store and distribution center employees, which CEO Michelle Gass called "an incredibly difficult decision." Gass also said she would not take a salary during the crisis.
Kohl's will still offer in-store pick-up for online orders, but it's clear that the company's sales have plummeted during the outbreak. Last Friday, Cleveland Research analyst Rusty Wilson downgraded the stock and estimated that month-to-date comparable sales were down 50%.
With stores likely to be closed for at least weeks, retailers like Kohl's will have significant challenges ahead. The company is in better shape than some of its department store peers, but the stock is likely to continue to decline until there's some indication that stores will be reopening soon. Even then, consumers may be reluctant to visit stores, and the economy is likely to be in a recession, meaning shoppers will have less money to spend.
In any foreseeable scenario, tough times are ahead for Kohl's and its peers.