UPDATE 1-Goldman Sachs downgrades Kohl's, Macy's on valuation

(Recasts; adds details, share movement)

Aug 20 (Reuters) - Goldman Sachs downgraded department stores Kohl's Corp (KSS.N) and Macy's Inc (M.N) on valuation, and said it expects softer sales for the retailers as the boost from stimulus checks wanes.

The brokerage cut shares of Macy's and Kohl's from "neutral" to "buy," but maintained its earnings estimates and outlook for the companies. It has a price target of $48 on Kohl's and $21 on Macy's.

Analyst Adrianne Shapira said while the stocks have rallied due to lower oil prices and better-than-expected second-quarter earnings, the key to a longer-term inflection point in fundamentals -- a turn in same-store sales -- remains far off.

"Lower oil prices should help in the near-term, but could easily reverse over the longer-term and housing/credit markets remain a drag," Shapira said in a note to clients.

The analyst said top-line fundamentals are likely to remain challenged as tighter inventory control leads to lower clearance activity, unit sales and revenue gains.

"We await a return of rising unit sales alongside higher full price selling to become more bullish," Shapira said.

Sales gains could become increasingly difficult as the boost from the stimulus checks begins to ease, the analyst added.

Shares of Kohl's were down 15 cents at $48.67 while Macy's shares were down about 12 cents at $20.20 in morning trade on the New York Stock Exchange. (Reporting by Anne Pallivathuckal in Bangalore; Editing by Anil D'Silva)