Zacks Investment Research downgraded shares of Kohl's Corp (KSS) from NEUTRAL to UNDERPERFORM on January 28, 2013, with a target price of $41.00.
We have downgraded our recommendation on Kohl's to Underperform from Neutral on the back of poor performance in the holiday season. Unfavorable weather conditions and lower consumer confidence forced Kohl's to give more than expected discounts to its customers. This reflected in company's December comparable store sales which increased year over year, but was lower than the company's expectations. The company's failure to generate expected sales in the holiday season also led to lowering of the company's fourth quarter and fiscal year guidance. Moreover, the company's margins are being significantly hurt by increasing costs of cotton and other raw material costs since last two years. Though the third quarter results were decent, we remain concerned about the rising commodity costs, increased volatility in the financial markets and overall uncertainty in the macroeconomic environment.
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