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
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
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.
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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 email@example.com. He doesn't have any positions in the companies mentioned.