Baird downgraded Kohl's (NYSE:KSS) to "neutral" from "outperform" after the company's weak third quarter and noted the ongoing pressure in its core apparel and footwear business, among notable challenges.

Kohl's reported disappointing Q3 earnings as sales in key segments lagged expectations, prompting a downward revision of its full-year outlook.

Kohl's on Tuesday forecast a bigger drop in annual sales than previously expected, a sign the department-store chain is struggling to draw in shoppers as it navigates a CEO change ahead of a deal-heavy holiday shopping season.

Kohl’s saw sales decline in the latest quarter while its revised outlook for the year suggested a challenging upcoming holiday period, creating a challenging setup for its next chief executive.