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Kohl's Plummets: 'Mocial' Strategy Becoming Essential For Struggling Retailers?

2017 has not been good to the department stores so far, with Macy’s Inc M 14.09% sinking over 14 percent after announcing the closing of 68 stores and laying off 10,000 employees Thursday, and Sears Holdings Corp SHLD 1.35%'s days looking numbered after announcing the closure of 150 stores.

Taking A Look At Kohl's

Kohl’s Corporation KSS 18.99% is experiencing a similar fate on Thursday, losing a fifth of its market cap with shares plummeting over 20 percent after disappointing holiday results.

“With expectations for accelerating SSS trends and GPM improvement, November/December SSS results were disappointing as the company’s higher margin women’s apparel business was challenged along with accessories,” said Deutsche Bank.

Same-store sales were -2.1 percent, the same figure posted by Macy’s this holiday season.

Management also lowered the FY 2016 adjusted EPS guidance by ~7 percent to $3.60–$3.65. Deutsche Bank reiterating its Hold rating on Kohl’s as it waits for signs of improving and sustainable EPS growth.

Is 'Mocial' The Key For Struggling Retailers Success?

The bank believes upside risks include “increased sales if customers respond favorably to efforts in omnichannel, localization, and personalization” — in other words, a mobile, local and social ("mocial") strategy, which Benzinga alluded to in 2016 as essential to the future of struggling’s retailers' success.

Deutsche Bank's highlighted downside risks include “a slowdown in consumer spending, merchandising missteps, and lower than expected GPM.”

Deutsche Bank reiterated its Hold rating on Kohl’s, while lowering its price target to $40 from $47. The bank also lowered FY 2017 EPS estimates to $3.61.

Jan 2017Telsey Advisory GroupDowngradesOutperformMarket Perform
Jan 2017BairdDowngradesOutperformNeutral
Nov 2016BuckinghamDowngradesBuyNeutral

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