Five Reasons Kohl's Is In Big Trouble

The company also reported a less-than-stellar outlook for the holiday seasons.

The problems at Kohl's mirror those of other middle-class stores like Wal-Mart and JCPenney. Consumers are increasingly concerned about money, and are unwilling to shell out for apparel.

But there are also problems within the company, especially how stores are laid out, Brian Sozzi, chief equities strategist at Belus Capital Advisors, told us.

"Kohl's stores are laid out in a 'racetrack' format,'" Sozzi says. "Basically, you enter a one level store and stay on the yellow brick road to pop in and out of departments."

He illustrates some problems that could be hurting sales at Kohl's.

1. The stores appear cluttered with a wide array of merchandise. "This hurts the shopping experience, you feel overwhelmed and want to leave the store," Sozzi said.

Here's a photo Sozzi took inside a suburban New York store illustrating how a typical aisle looks:

2. The cosmetics section is less advanced than competitors like Target. "Customer service is absent andTarget has now put beauty consultants in its cosmetics department to improve sales," Sozzi writes.

At Kohl's, the cosmetics counter doesn't include assistants:

3. There are no try-outs for toys. Other department stores, like Macy's, let customers try out merchandise. At a time when customers are wary of taking risks, it's crucial to let them do some research, Sozzi said.

4. The home department doesn't display how products can be used and appears cluttered. Without good displays, customers are less likely to relate to products, Sozzi said.

5. Kohl's doesn't have the hot jewelry brands consumers want. The brand has done a good job attracting big names like Jennifer Lopez and Vera Wang in apparel, and they should try to get hotter brands for the jewelry department, Sozzi said.