Lorraine Hutchinson downgraded Kohl's from Buy to Neutral with a price target lowered from $55 to $50.
Kohl's 0.2% comp decline fell short of BofA's estimate of 1% growth and also shy of management's own guidance of flat to 1% growth, Hutchinson wrote in the note. Management attributed the shortfall to poor performance in the women's category.
Hutchinson said the negative comp is also "surprising" given Kohl's focus on product newness, especially in the women's category. There is no reason to believe any initiatives aren't strong enough to offset broader secular pressures.
Combined with the Amazon.com (NASDAQ: AMZN) return program, the analyst said Kohl's should have shown outsized comp performance versus its peers.
Looking forward to 2020, the research firm is revising its full-year EPS estimate from $5.10 to $4.10 to reflect a "much slower" run-rate entering the new year. The revision also factors in concerns Kohl's will need to continue spending and promoting itself to keep existing customers and gain new ones.
Shares of Kohl's were trading lower by more than 9% at $44.89.
Photo courtesy of Kohl's.