Kohl's Corporation (NYSE:KSS) stock dropped 24% in premarket trading on Thursday after reporting a surprise swing to a loss in the past quarter.
The mid-tier department store chain also issued a profit warning.
For the first three months of the year, Kohl's reported a $27 million loss, or 24 cents a share, up from 13 cents a share a year earlier.
Wall Street analysts had expected positive earnings per share of 5 cents, per FactSet.
First-quarter revenue fell 5.3% to $3.2 billion, which was also short of the average analyst forecast of $3.4 billion, though same-store sales were down 4.4%.
The problem, the company said, was clearance sales, which hit the overall comparable sales by 6%, with underlying regular price sales up 2.4%.
For the full year, Kohl's guided to positive EPS of $1.25 to $1.85, below the Street consensus of $2.40.
CEO Tom Kingsbury said, "Our first quarter results did not meet our expectations and are not reflective of the direction we are heading with our strategic initiatives."
He pointed to success in "underpenetrated" categories, positive trends in the Women’s business and further strong growth in Sephora beauty products (he didn't say whether or note it was all from the recent strong demand from pre-teen 'Sephora tweens').
"We continue to have high conviction in our strategy and believe that our key growth initiatives, including Sephora, home decor, gifting, impulse, and our upcoming partnership with Babies “R” Us, will contribute more meaningfully going forward.
"That said, we recognize we have more work to do in areas of our business.
"We are approaching our financial outlook for the year more conservatively given the first quarter underperformance and the ongoing uncertainty in the consumer environment," Kingsbury said.