Demand at Kohl’s department stores, which dedicate most of the shelf space to products such as apparel, “considerably weakened” in April as consumers started to feel the pinch of soaring prices, Kohl’s Chief Executive Michelle Gass said.

The impact of inflation is not expected to abate any time in the near future, company executives said.

The company expects sales to improve in the second half of the year as Kohl’s expands its partnership with LVMHSephora

Shares of the company, which reiterated that it is in talks with multiple parties for a potential sale, rose about 2% to $44.

Kohl’s net sales fell 5.2% to $3.47 billion in the first quarter. On an adjusted basis, the company earned 11 cents per share, missing estimates of 70 cents, according to Refinitiv data.

“We expected a weaker Q1 for Kohl’s, but not to this extent. Inflation continues to eat into consumer wallets and we are starting to see it finally creep into consumer habits,” CFRA Research analyst Zachary Warring said.

Kohl’s lowered its full-year per share forecast for adjusted earnings to between $6.45 and $6.85, from $7.00 to $7.50.
The company expects annual net sales to rise as much as 1%, compared with its previous forecast of a 2% to 3% increase.