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Here's why Kohl's problems are typical of retail in general

A Kohl’s department store in Jersey City, New Jersey.
Getty Images
A Kohl’s department store in Jersey City, New Jersey.

Kohl's is emblematic of the problem with retailers: shifting consumer tastes with no clear path to revenue growth.

The company missed earnings expectations, and said full-year earnings would be at the low range of the previous guidance of $4.40 to $4.60.

This, after a disappointing report from Macy's.

It's not looking great for department stores.

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This problem did not appear in the second quarter, however. The simple fact is that retailers cannot get any revenue growth. Look at Kohl's revenue for the last few years.

Kohl's Annual Revenue (billions)

  • 2012: $19.2
  • 2013: $19.0
  • 2014: $19.0
  • 2015 (est.): $19.0
  • 2016 (est.): $19.3

That's $19 billion a year. For five years. Zero revenue growth. Nada.

Modest growth in earnings is coming from buybacks and constant cost-cutting.

And even same-store sales growth is getting hard to come by. Comparable-store sales were up 0.1 percent in the second quarter, well below Street expectations of a gain of 1.5 percent.

For the first half of 2015, same store sales were up 0.8 percent. Regardless, Kohl's is maintaining guidance of full-year growth of 1.5 percent to 2.5 percent.

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Now, to get to 1.5 percent to 2.5 percent full-year growth with first-half sales up only 0.8 percent, you're going to need growth well north of 3 percent in the second half.

Really? Does anyone believe Kohl's can get 3 percent to 4 percent comparable-store sales in the second half, after guiding to the low end of the earnings range, and after Macy's said yesterday second-half comps would only come in at 1 percent?

Anyone?

It all adds up to a very uncertain retail backdrop.

The positives for retail:

1) Improving employment

2) Improving consumer confidence

The negatives:

1) Shifting consumer tastes, away from apparel to electronics/autos

2) Online sales growth

3) Uncertain growth in Europe/China

4) Dollar strength

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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