Kohl’s Stock Drops After Bank of America Downgrade Over Supply-Chain Worries
Kohl’s Supply-Chain Worries Spark BofA Downgrade; Shares Decline
(Bloomberg) -- Kohl’s Corp. fell Thursday after Bank of America slashed its investment recommendation for the retailer by two levels, citing supply-chain risks ahead of the holiday season.
The shares slumped 14% at 10:51 a.m. in New York, reaching their lowest level intraday since February after BofA placed an “underperform” rating on the stock, down from “buy.” The price target for the stock was reduced to $48 from $75. In a research note, analyst Lorraine Hutchinson said that the shares are “relatively inexpensive,” but operational difficulties “could hinder Kohl’s sales recovery and offset both progress that the team is making on women’s and the benefit of Sephora.”
Kohl’s has recently teamed up with the beauty retailer to open in-store shops in bid to drive store traffic. The company has also boosted its sports apparel selection, but Hutchinson noted that top active brands like Nike and Adidas are facing supply-chain pressures of their own.
Investors are closely watching retail performance as prices surge and shipping bottlenecks complicate companies’ efforts to meet robust demand. Bed Bath & Beyond Inc. plunged as much as 29% Thursday after the home-goods retailer missed estimates and trimmed its sales outlook, citing a decline in store traffic due to the delta variant’s spread and supply-chain challenges that have raised costs beyond expectations.
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