Kohl’s Beats Profit Estimates Despite Sales Drop, Cuts Costs

Key Takeaways

• Kohl’s beat profit estimates for the second quarter, despite lower sales, as the discount department store operator cut costs.
• Kohl’s warned about a challenging consumer environment but raised its full-year outlook for earnings per share.
• Kohl’s shares edged higher Wednesday, but they’ve lost nearly a third of their value this year.

Kohl’s (KSS) shares rose Wednesday as cost reduction helped the retailer beat profit forecasts despite a drop in sales.

Kohl’s reported second-quarter earnings per share (EPS) of 59 cents, 14 cents above the average estimate of analysts surveyed by Visible Alpha. Revenue fell 4.2% to $3.5 billion and comparable store sales slipped 5.1%. Both figures were below expectations. Selling, general, and administrative (SG&A) expenses also declined 4.2%, to $1.2 billion.

Kohl’s now sees full-year revenue down 6%, compared with an earlier prediction of a 4% fall. But it lifted its profit outlook for the year, to a range of $1.75 to $2.25 a share, up from a previous forecast of $1.25 to $1.85 per share.

Kohl’s anticipates that full-year comparable store sales will fall 5% versus the previous expectation of a decrease of 3%. Shares of Kohl’s, which edged higher Wednesday, have lost nearly a third of their value this year.

Affected by ‘Softness in Core Business’

Chief Executive Officer Tom Kingsbury said his company has taken “significant action to reposition Kohl’s for future growth.” However, he said the gains were muted in part because of “a continued challenging consumer environment and softness in our core business.”

Kingsbury added that during the quarter, shoppers “exhibited more discretion in their spending.” Even so, he said, the company’s “conviction in our strategy remains strong.”

Despite lower sales, Kohl’s managed to beat profit estimates for the second quarter. The discount department store operator achieved this by cutting costs and reducing selling, general, and administrative expenses. Kohl’s shares rose as a result, although they have still lost a significant portion of their value this year.

While the revenue for the full year is expected to decline by 6%, Kohl’s raised its profit outlook, indicating confidence in its ability to manage costs and improve profitability. The company also expects comparable store sales to fall by 5% for the year, reflecting the challenging consumer environment and reduced spending by shoppers.

CEO Tom Kingsbury acknowledged the softness in Kohl’s core business but expressed confidence in the company’s strategy for future growth. He emphasized the actions taken to reposition the company and the conviction in their approach.

Overall, Kohl’s ability to beat profit estimates despite a drop in sales demonstrates its commitment to cost reduction and efficiency. By addressing the challenges in the consumer environment and focusing on their core business, Kohl’s aims to position itself for future success.

Investors will be closely watching Kohl’s performance in the coming quarters to assess the effectiveness of its strategies and the potential for a rebound in sales. With a strong conviction in their strategy, Kohl’s remains determined to overcome the current challenges and drive growth in the long term.

Disclaimer: The information provided here is for informational purposes only. It should not be considered as financial advice.

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