Kohl's (KSS.US) stock plunges before market open as new CEO struggles to reverse disappointing earnings guidance.

Kohl's (KSS.US) on Tuesday released its annual sales guidance, showing a significant decline in sales and a lower-than-expected profit, as the US department store chain struggles to turn around under its new CEO, but faces challenges of unstable demand.

The company expects a 4% to 6% decline in same-store sales in 2025, far below the market's expectation of a 0.9% decline. Earnings per share are expected to be between 10 cents and 60 cents, while analysts expect $1.23.

Moreover, Kohl's same-store sales in the holiday season also fell short of market expectations. The data showed a 6.7% decline in same-store sales in the fourth quarter, while the market expected a 6.2% decline.

After the earnings release, the apparel retailer plunged 15% before the US market opened on Tuesday.

Since taking over in January, new CEO Ashley Buchanan has launched a cost-cutting and store-closing plan in an effort to revive the company.

However, as inflation risks rise and recession fears intensify, Kohl's, along with larger competitors Macy's (M.US) and big retailers Walmart (WMT.US) and Target (TGT.US), have all lowered their earnings expectations amid the chaos of Trump's tariffs.

This uncertainty has exacerbated Kohl's woes, as its sales have been under pressure for the past three years as consumers shift to cheaper options at discount retailers such as TJX Companies (TJX.US).

The company has also suffered from its own mistakes, including its exit from the high-end jewelry business and its decision to prioritize Sephora stores.

The significant reduction in its own-brand clothing production in 2024 also affected sales of women's and children's wear, as cost-conscious consumers opted for competitors' retailers.

Since the beginning of this year, Kohl's stock has fallen 14%.

The company said it has identified areas of focus, including re-gaining market share in categories such as high-end jewelry, and is taking action to reposition the company.

To improve its performance, Kohl's has also stepped up its cooperation to increase foot traffic at its stores. Last year, the company announced plans to open Babies "R" Us stores in some locations.