Shares of Kohl's Corporation (NYSE: KSS) tumbled 9.8% on Monday, closing at $13.09, as rising gasoline prices reignited concerns about consumer spending on non-essential items. The decline significantly outpaced a modestly positive session for the broader U.S. equity market, with the S&P 500 adding 0.19%, the Dow Jones Industrial Average rising 0.19%, and the Nasdaq Composite edging up 0.10%.
The selloff was triggered by data from AAA showing the average price of regular gasoline in the United States reached $4.520 per gallon on May 11, up sharply from $4.135 a month earlier and well above the $3.135 recorded a year ago. This surge in fuel costs directly impacts the household budgets of Kohl's core customers, many of whom are middle-income families already grappling with inflationary pressures.
According to a StockStory report cited on TradingView, investors grew increasingly uneasy as higher gas prices threaten to divert disposable income away from discretionary categories like apparel and home goods, which are central to Kohl's turnaround strategy. The retailer has been working to stabilize its business after reporting a 3.9% decline in fourth-quarter net sales and a 2.8% drop in comparable sales for fiscal 2025.
Looking ahead to fiscal 2026, Kohl's has projected net and comparable sales to range from a decline of 2% to flat, with adjusted diluted earnings per share estimated between $1.00 and $1.60. These forecasts, issued in March, already reflected a cautious outlook, but Monday's price action suggests investors are losing patience with the pace of recovery.
Kohl's was not alone in its decline. Other major retailers also felt the heat, with Target Corporation (NYSE: TGT) falling 5.44%, Walmart Inc. (NYSE: WMT) sliding 2.18%, and TJX Companies Inc. (NYSE: TJX) moving lower. The broad-based selling across consumer discretionary names underscores the market's sensitivity to any signs that household spending may be contracting.
Tarry Sandven, chief equity strategist at U.S. Bank Wealth Management, noted that investors are closely monitoring "any change in consumer spending behavior" following "elevated prices at the gas pump." This sentiment was echoed by David Silverman, senior director at Fitch Ratings, who acknowledged Kohl's recent profit improvements from tighter inventory and cost controls but cautioned that "the ending has not yet been told" regarding the retailer's ability to regain market share.
Kohl's management has outlined a multi-pronged turnaround plan centered on refining its product mix, sharpening pricing and quality, and enhancing the omni-channel experience across stores, web, and mobile app. While these initiatives are considered sound retail fundamentals, they are not quick fixes, and the current macro environment could slow progress.
The stock's decline could reverse if gasoline prices retreat or if upcoming retail data shows consumer resilience. However, the immediate risks include softer foot traffic, increased markdowns, and compressed margins, which would complicate Kohl's efforts to convince the market that its turnaround story is gaining traction.
Kohl's is scheduled to report its first-quarter fiscal 2026 earnings on May 28. Investors will be looking for evidence that improvements in early-year apparel sales and cost discipline have held up despite the recent uptick in fuel costs.
