Amazon.com Inc. parking signage stands outside a Kohl's Corp. department store in Huntington Beach, California, U.S., on Saturday, May 11, 2019. Kyle Grillot | Bloomberg | Getty Images

Kohl's tie-up with Amazon was supposed to be a boon to the department store chain, which is teetering between sales gains and declines. But any benefits from accepting Amazon returns in its stores, and all of that expected new customer traffic, are now in doubt after Kohl's released its holiday sales results Thursday. After announcing the deal in 2017 and testing it in about 100 Kohl's stores, this was the first holiday season that Kohl's accepted returns for items purchased on Amazon in all of its more than 1,150 stores.

Kohl's CEO Michelle Gass was confident the collaboration would drive sales, especially through the end of the year, she told investors. Gass assured Wall Street analysts, as recently as November, that the Amazon returns would "drive additional traffic into our stores" over the holiday season. "It's just absolutely critical that we maximize this opportunity right here right now to capture the new customers, especially coming in for the new brands we're launching, all the innovation and then new traffic and new customers who are being introduced to Kohl's for the first time through the Amazon Returns program," she added at the time. But Kohl's stood out among retailers reporting holiday sales this week for really missing the mark. Wall Street analysts expected sales at Kohl's locations open for at least 12 months to grow, albeit by less than 1%, during the critical fourth quarter — while many of its competitors were projected to see their sales drop. Department store chain J.C. Penney's holiday sales results were more dismal, but that was largely expected. Macy's also reported a same-store sales decline, but it wasn't as bad as anticipated, sparking a bit of optimism for the company. Kohl's same-store sales during November and December fell 0.2% — instead of rising by 0.4% as expected — due to weakness in its core women's apparel business, leading it to temper expectations for the year. The news announced early Thursday sent Kohl's shares tumbling more than 9% in midday trading. The stock is down about 35% from a year ago. Kohl's has a market value of about $7 billion.