Retail Stocks Slide As Weak Consumer Spending And Kohl's Grim Outlook Hit Sector Hard

Vaishali Prayag

March 11, 2025

Benzinga

The SPDR S&P Retail ETF (NYSE:XRT) is trading lower Tuesday as retail and apparel stocks fall following weak consumer spending data and poor earnings reports.

What To Know: Kohl's Corporation (NYSE:KSS) is dragging the sector lower after the company reported a sharp drop in fourth-quarter sales and issued weak guidance for 2025.

For fiscal year 2025, Kohl's expects sales to decline by 5% to 7% and comparable sales to fall by 4% to 6%. The company also cut its quarterly dividend by 75% to $0.125 per share. Kohl's expects 2025 earnings per share between 10 cents and 60 cents, well below Wall Street's estimate of $1.25.

The retail sector is also under pressure as consumer spending weakens. February retail sales declined again after a drop in January, signaling a slowdown in consumer demand. Investors are also watching inflation closely, with the next Personal Consumption Expenditures (PCE) report due on March 28.

Why It Matters: Kohl's sharp stock decline and the broader retail selloff reflect growing concerns about slowing consumer spending and its impact on major retailers. With inflation still elevated and household budgets tightening, discretionary spending is falling, putting pressure on companies reliant on consumer demand. Kohl's weak 2025 guidance suggests these challenges will continue, raising questions about profitability across the sector.

Other major retailers are also trading lower. Nordstrom Inc. (NYSE:JWN) is down 7.8%, Macy Inc.'s (NYSE:M) has fallen 5.4% and Target Inc. (NYSE:TGT) is down 4.2% as concerns about weak sales and consumer sentiment grow. Investors are watching upcoming economic data closely for more signals on consumer weakness and its impact on retail stocks.

XRT Price Action: The SPDR S&P Retail shares are down 1.56% at $69.39 at the time of writing, according to Benzinga Pro.