Kohl's Stock Falls Before Earnings as Retailers Struggle

Kohl's Corp (NYSE:KSS) will follow up sector peer Macy's (M) in the earnings confessional, with fourth-quarter results due out before the market opens on Tuesday, March 11. Per Zacks.com, analysts expect the retailer to announce quarterly profits of 72 cents per share on revenue of $5.35 billion, both marking significant declines from a year ago amid ongoing consumer spending challenges.

The security has a history of lackluster post-earnings reactions, including a 17% drop after its November report. Over the last two years, KSS has logged a next-day loss in five of its last eight earnings reports, averaging an 8.7% swing in either direction. This is much smaller than the 19% move options traders are currently pricing in.

Kohl's stock is down 0.8% to trade at $11.27 at last glance, extending its 19.6% year-to-date decline as well as its 58.4% loss in the last 12 months. The equity's 20-day moving average has acted as pressure for the past several months, and may not let up anytime soon.

Analysts remain largely bearish, with all 12 covering brokerages rating KSS a "hold" or worse. Short sellers have also increased their bets, with short interest rising 8.4% in the last reporting period to 46.96 million shares sold short, representing 43.3% of the stock’s float. 

Meanwhile, options traders lean bullish. KSS sports a 50-day call/put volume ratio of 2.83 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that sits in the 98th percentile of annual readings. This indicates some may be betting on an earnings-driven rebound, despite recent struggles.