Kohl’s Corp (NYSE:KSS) shares are trading lower after the company reported worse-than-expected first-quarter FY24 earnings and slashed its outlook.

The company reported a first-quarter FY24 sales decline of 5.3% year-on-year to $3.178 billion, missing the analyst consensus estimate of $3.335 billion.

Comparable sales for the quarter decreased 4.4%. Gross margin for the quarter expanded by 48 basis points to 39.5%.

Operating income for the quarter was $43 million versus $98 million last year. The operating margin contracted 148 basis points to 1.3%.

Selling, general and administrative expenses decreased 0.8% to $1.2 billion. As a percentage of total revenue, SG&A expenses were 36.3%, an increase of 166 basis points year-over-year.

EPS of $(0.24) missed the analyst consensus estimate of $0.03.

Inventory at the end of the quarter was $3.1 billion, a 13% decrease Y/Y.

Kohl’s held $228 million in cash and equivalents as of May 4. Operating cash flow was a use of $7 million as compared to a use of $202 million in the prior year.

On May 15, Kohl’s Board declared a quarterly cash dividend on the common stock of $0.50 per share. The dividend is payable on June 26 to shareholders of record on June 12.

Tom Kingsbury, Kohl’s chief executive officer, said, “Our first quarter results did not meet our expectations and are not reflective of the direction we are heading with our strategic initiatives. Regular price sales increased year-over-year, with early success in underpenetrated categories, positive trends in our Women’s business, and continued strong growth in Sephora. However, lower clearance sales versus last year represented a more than 600 basis point drag on comparable sales.”

“We are approaching our financial outlook for the year more conservatively given the first quarter underperformance and the ongoing uncertainty in the consumer environment,” Kingsbury continued.

Outlook: Kohl’s slashed FY24 sales growth outlook from (1)% – 1% to a decline of (2%) – (4%). The company sees FY24 comparable sales decline of (1%) – (3%) (previously a growth of 0% – 2%).

Kohl’s expects FY24 EPS of $1.25 – $1.85 versus the Street view of $2.34. The company’s prior outlook was $2.10 to $2.70, excluding any non-recurring charges.

Kohl’s expects an FY24 operating margin of 3% – 3.5% (previous 3.6% – 4.1%) and capital expenditures of about $500 million, including expansion of its Sephora partnership and other store-related investments.

Price Action: KSS shares are trading lower by 22.6% at $21.09 in premarket at the last check Thursday.