Kohl's Corporation KSS shares are down 4% on Friday after the company cut its guidance and said inflation is eating into its sales growth.

On Thursday, Kohl's reported second-quarter adjusted EPS of $1.11 on $4.09 billion. Both numbers exceeded consensus analyst estimates of $1.30 and $3.85 billion, respectively. Revenue was down 8.1% from a year ago.

Same-store sales dropped 7.7% in the quarter. Kohl's also said its inventory ballooned 48% compared to a year ago.

Looking ahead, the company cut its fiscal 2022 adjusted EPS guidance from a previous range of between $6.45 and $6.85 to a new range of between $2.80 and $3.20.

Related Link: 4 Walmart Analysts Raise Price Targets After Q2 Earnings Beat: 'Leader And Market Share Gainer'

Macroeconomic Pressures: Bank of America analyst Lorraine Hutchinson said she remains cautious as macro pressures mount for Kohl's.

"Mgmt called out a slowdown from the middle-income consumer, cited reduced spend per transaction and a shift to value-oriented private brands," Hutchinson wrote.

Morgan Stanley analyst Kimberly Greenberger said Kohl's "fundamentals are likely to get worse before they get better."

"We worry KSS' diminished financial flexibility leaves it with far fewer shock absorbers should the road ahead remain bumpy," Greenberger wrote.

Related Link: 4 Rivian Analysts On Sales Growth, Widening Losses: Is EV Maker Back On Track After 'Horror Show' IPO?

Credit Suisse analyst Michael Binetti said Kohl's updated guidance is concerning, but it may be conservative.

"We're concerned to hear that Children's apparel underperformed the chain in 2Q ahead of the important BTS season," Binetti wrote.

Difficult Margin Outlook: Telsey Advisory Group analyst Dana Telsey said Kohl's need for promotional activity doesn't bode well for its margin outlook.

"Promotional activity looks to weigh on margins in the back half of the year as the company moves through elevated inventory, while ongoing investments in strategic initiatives adds incremental expense as well," Telsey wrote.

Guggenheim analyst Robert Drbul said improved inventory and reduced freight pressures should set Kohl's up for a much better 2023.

"While we are disappointed with the earnings reduction, we believe, at these levels, the shares reflect many of the concerns and challenges the company is facing and offers an attractive risk-reward ratio," Drbul wrote.

Photo: Sundry Photography via Shutterstock

© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.