Kohl's Tanks on BofA’s Double Downgrade Citing Supply Chain Issues

© Reuters.

By Dhirendra Tripathi – Kohl’s stock (NYSE:) plunged 14% Thursday after BofA (NYSE:) analyst Lorraine Hutchinson lowered the stock’s rating by two notches due to supply chain issues.

The analyst slashed the price target to $48, down 36% from the previous target of $75. The stock fell below the new target price to touch a low of $45.91 so far in the session underway today.

Hutchinson pointed out that the retailer’s top performing active brands like Nike (NYSE:), Under Armour (NYSE:), Adidas (OTC:), and Champion are facing supply chain issues. She said the product flow remains slow and warned investors to brace for a difficult second half.

Second-quarter inventory was down approximately 25% compared to 2019, with women’s down substantially more, as per the analyst. She said while Kohl’s is working to address the situation, conditions only worsened. This puts the high end of 2021 guidance at risk, she noted.

It was only last month that Kohl’s raised its guidance for the financial year. Net sales are now expected to increase in the low-20s percentage range compared to the previous expectation of mid-to-high teens percentage range.

Adjusted earnings per share are seen at $5.95 at midpoint, compared to the previous expectation of $4 at center of the range.



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