Earnings Season Fizzle Puts Kohl’s In The Spotlight

Earnings season is a time for reflection after reaction. For Kohl’s, which put up a poor showing in its latest results, and which gave the nod to a rocky roadmap of execution amid trade wars and brick-and-mortar challenges, the reaction was swift.

Investors dumped the stock by double digits, and now the reflection: Is Amazon enough?

The department store company said comp sales were off 3.4 percent in the first quarter, while analysts had seen that measure down 10 basis points. It was the worst showing of comp sales in several years, and the company brought its guidance far below the Street, as gross margins were weighed down.

One culprit: The trade war that, in its latest salvos, has seen the Trump administration impose 25 percent tariffs on $300 billion of items imported from China, including shoes and clothing – which have their prominent place in department stores such as Kohl’s. Digital sales? Well, they are gaining momentum, said management on the post-earnings conference call – but, even being up double-digit percentages (and unquantified in dollars) was not enough to give relief to downward pressures.

Management has pointed to a partnership with Amazon, where consumers can make returns at Kohl’s, ostensibly boosting foot traffic in stores.

One hope is to lure in millennial shoppers, who are omnichannel in their shopping habits, and of course wield wallet and purse power. But will it be enough?

The Amazon pact has been quickly coming out of pilot phase, rolled out across a wide base of Kohl’s locations. In the meantime, though, the top-line pressures on the company are real and immediate, a storm that makes for a fizzle this past week (not just in the stock), and possibly over the near term.

Sizzle

Transferwise: Unicorn taking flight, as the U.K. financial firm, focused on money transfers, raised $292 million, taking it to a $3.5 billion valuation – which means the company is now among the continent’s most valuable startups, processing the equivalent of $5 billion monthly.

CBD: Gets a boost, in terms of payments, and might be poised to go a bit more mainstream as Square begins to process CBD payments. The pilot program thus far exists as an “invite only” beta.

Google: Now, Google for noodles – or anything else that’s got your stomach growling – to your door. Amid the crowded food delivery landscape comes the search giant. Consumers can now order food directly from Google Search, Google Maps or Google Assistant, as it ties in with food delivery companies like DoorDash and ChowNow. The food can be ordered without downloading apps or visiting the delivery firms’ websites.

Fizzle

Loot: Not every FinTech is slated for success. In the U.K., Loot, which targeted millennials through apps and digital financial services, went into receivership after it ran out of cash and a rumored sale to RBS fell through.

Ancient glitches: Reports came this past week that Deutsche Bank discovered a software glitch in its anti-money laundering (AML) processes, which prevented the use of a program that retroactively scans and analyzes corporate payments. The program has been designed to flag potentially suspicious transactions. The glitch has been around for roughly a decade.

No luck in Luckin: No jolt, as shares in Chinese coffee firm Luckin slide below the IPO price – as has been seen with other IPOs (like Uber and Lyft), amid investor concerns about strategic roadmaps toward profitability.