(Reuters) -Kohl’s on Tuesday forecast a bigger drop in annual sales than previously expected, a sign the department-store chain is struggling to draw in shoppers as it navigates a CEO change ahead of a promotion-heavy holiday shopping season.
Shares of the Menomonee Falls, Wisconsin-based company fell 17% before the bell, as it also reported worse-than-expected third-quarter results.
The weak forecast underscores an uncertain holiday season for the retail sector, which could lean in favor of deal-heavy competitors such as Walmart (NYSE:WMT) and Amazon.com (NASDAQ:AMZN) as customers turn increasingly bargain-focused.
“Our third-quarter results did not meet our expectations, as sales remained soft in our apparel and footwear businesses,” Kingsbury said.
Kohl’s (NYSE:KSS), whose stock has declined 36% in value this year, announced the exit of CEO Tom Kingsbury a day earlier. He will be succeeded by Ashley Buchanan, retail veteran and Michaels Companies (NASDAQ:MIK) chief, in January.
The CEO’s surprise departure comes as the company enters the critical holiday shopping period including Black Friday, one of the busiest times of the year for retailers and shoppers.
Higher prices of groceries and other essentials have stretched consumer budgets, particularly among middle-income shoppers, prompting them to opt for cheaper offerings at off-price retailers such as TJX (NYSE:TJX) Cos, which has seen strong sales this year.
Under the outgoing CEO, Kohl’s had focused on improving its assortment of product in the home decor, gifts and kid’s clothing categories, as part of the company’s turnaround efforts in response to its slowing core apparel and footwear business.
It logged a decrease in comparable sales of 9.3% for the quarter ended Nov. 2, its eleventh consecutive quarter of decline. Analysts on average estimated a 5.1% drop, according to data compiled by LSEG.
Earnings-per-share missed expectations at 20 cents per share, compared to an estimate of 28 cents.
The company now expects full-year net sales in the range of a 7% to 8% decline, compared to its prior forecast of a drop between 4% and 6%. This is Kohl’s third straight quarter with a lowered sales forecast.