What: Shares of department store operator Kohl's (KSS 2.83%) tumbled on Thursday after the company provided a fourth-quarter financial update, slashing its earnings guidance for the full year. At noon Thursday, the stock was down about 18%.

So what: Kohl's reported comparable-store sales growth of 0.4% for the fourth quarter and 0.7% for the full year, below the company's expectations. CEO Kevin Mansell pointed to extremely volatile sales during the fourth quarter, driven by a highly promotional environment and weak traffic because of unseasonably warm weather.

Due to these issues, Kohl's was forced to engage in higher-than-expected markdowns during the fourth quarter, pushing the company's gross margin below expectations. Excluding debt extinguishment charges, full-year EPS is now expected to be between $3.95 and $4.00, down from a previous guidance of $4.40 to $4.60. Analysts were expecting EPS of $4.30.

Now what: The holiday quarter marked the fifth quarter in a row that Kohl's has reported positive comparable-store sales, but the slashed earnings guidance was enough to send the stock lower. Kohl's is set to report its lowest per-share earnings since 2010, despite the fact that extensive share buybacks have lowered the share count by roughly one-third over the past five years.

Shares of Kohl's have carved out a new 52-week low on the news, and management will have a lot of explaining to do when the company formally reports its fourth-quarter earnings on Feb. 25. Other retail stocks are tumbling as well thanks to Kohl's results, including Macy's (M 1.44%), which is down about 3.4% on the news. Macy's is facing its own set of problems, with comparable-store sales slumping 5.2% during November and December. Warm weather and weak tourist spending did a number on Macy's results, and it was forced to slash its own earnings guidance for the fourth quarter.

With Kohl's now following suit, investors are right to be concerned about weak retail traffic. Kohl's will provide initial 2016 guidance when it reports its earnings later this month, and we will need to wait until then to see if the company expects 2016 to be any better.