Comedy of Errors as Kohl's Sees Profit Fall

Kohl's

really hasn't had the best time of it of late, struggling through the economic crisis perhaps more than rivals Macy's

, Sears

. That trend isn't showing any signs of slowing down in the near-term, as KSS reported a 23% drop in first quarter profit. The company has seen its gross margin severely hit by price cuts which Kohl's implemented in what seems like a desperate bid to lure back customers. But then desperate times call for desperate measures. It isn't looking like things are going to get any better, with KSS forecasting another quarter of less-than-impressive sales. The company projects that same-store-sales would be flat, or achieve a 1% rise at best in the current quarter. The first quarter saw a 0.2% rise. Kohl's is expecting second quarter earnings of 96 cents to $1.02 per share. Kohl's tactics over the past few months have been a comedy of errors. It struggled horribly during the normally lucrative holiday period thanks to some overly-aggressive pricing during a time of domestic economic fragility. Even in the holidays, consumers have been watching their dollars closely, and ensuring they are getting value for money with everything. High prices during the holidays was never going to cut it, and so it proved. As a result, Kohl's reduced its prices this spring, but that seems to be a case of too little too late. The consumer, a fickle beast at the best of times, is tough to get back on side once their trust has been lost. CEO Keith Mansell admits that the holiday price hikes and subsequent drops led to "significantly lower gross margins." He's right too, with the gross margin falling 2.2 percentage points to 35.9% of sales. KSS's first quarter profit of $154 million, or 63 cents per share, down from $201 million, or 69 cents per share the previous year, does nothing to calm those fears.