03:24 PM EDT, 03/13/2024 (MT Newswires) -- Kohl's (KSS) is likely to face persistent challenges to its sales growth in 2024 and beyond, UBS Securities said Wednesday in a note.

Kohl's loss of market share to "off-price" channels is widely underestimated and this view of UBS was strengthens by the company's Q4 results. "We also believe the consumer spending environment will remain lackluster and this is a second factor which will make it difficult for [Kohl's] to drive positive sales growth in [2024] and beyond," the investment firm added.

UBS believes that Kohl's 8x price-to-earnings ratio does not fully account for its sales challenges in a sluggish consumer environment. The firm sees increased risk to Kohl's sales growth, especially after Sephora roll-out.

UBS lowered Kohl's 2024 EPS estimate by 9.5%, reflecting pressure in credit revenue, offset by better expense management leading to gross margin gains. The investment firm further sees continued top-line challenges in 2025 and 2026, leading to further EPS declines of 16% and 5%, respectively.

UBS reiterated its sell rating on Kohl's with a price target of $15.

Price: 25.32, Change: -0.04, Percent Change: -0.16