UBS reiterates Sell rating on Kohl’s stock, citing share loss concerns

Investing.com - UBS reiterated its Sell rating on Kohl’s (NYSE:KSS) with a price target of $4.00, expressing concerns about the retailer’s competitive position and earnings outlook. According to InvestingPro data, the stock currently trades at $9.83, with 8 analysts recently revising their earnings estimates downward.

The investment firm believes the market is underestimating how Kohl’s is losing market share to other retail channels, particularly off-price retailers, which will negatively impact earnings.

UBS noted that a lackluster consumer spending environment will likely make it difficult for Kohl’s to achieve positive sales growth in fiscal year 2025 and beyond.

The firm also identified tariffs as another factor that could hurt Kohl’s profits in the coming quarters.

UBS anticipates that weaker-than-expected earnings will put pressure on Kohl’s stock price over the near term, potentially driving the share price toward their $4 target.

In other recent news, Kohl’s Corporation reported its first-quarter earnings for 2025, showing a notable improvement in earnings per share (EPS). The company’s EPS was reported at -$0.13, significantly better than the forecasted -$0.47, marking an improvement of $0.34 per share. Despite a 4.1% decline in net sales and a 7.7% drop in digital sales, revenue slightly surpassed expectations at $3 billion, compared to a forecast of $2.99 billion. The company’s strategic initiatives, such as the Sephora rollout and cost management efforts, have started to yield positive results, with SG&A expenses reduced by 5.2%.

Additionally, UBS analyst Jay Sole reaffirmed a Sell rating on Kohl’s with a price target of $4.00. The analyst pointed out that Kohl’s is losing market share to other retail sectors and does not expect significant progress in the company’s turnaround strategy until at least fiscal year 2026. UBS anticipates further downward adjustments to consensus earnings per share predictions due to tariff-related expenses and increased competition. This analysis highlights the challenges Kohl’s faces as it navigates a competitive retail environment.

Kohl’s is focusing on enhancing its proprietary brands and omnichannel experience to drive growth, with plans to continue its strategic initiatives. The company maintains its full-year guidance, expecting comparable sales to decline by 4% to 6% and an operating margin between 2.2% and 2.6%. These recent developments reflect the ongoing efforts and challenges Kohl’s encounters as it aims to reposition itself in the market.

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