Cole’s The struggling retailer posted a surprise profit and confirmed its full-year guidance as it chases a turnaround, sending shares soaring Wednesday.
Shares of the company were up more than 8% in early trade after rising higher earlier in the day.
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Throughout the retail industry, walmart, Target, locker And others about how high food prices are making it harder to sell clothing, sneakers, and other non-essential items. However, Kohl’s had to overcome a more fundamental hurdle: proving that its brand still resonated with shoppers and getting back on track for consistent sales growth.
On a conference call with analysts, Kohl’s CEO Tom Kingsbury and CFO Jill Timm highlighted what the retailer is doing to win back customers and attract new ones change. It’s opening more Sephora stores, expanding categories like pets and home decor, and rolling out gift-giving items ahead of the holidays.
Every time shoppers walk into a store, Kingsbury said what they’re seeing now is “something new and different and very talented, and a different look.”
Kohl’s reiterated its full-year outlook. The company said it expects net sales to decline by 2% to 4%, including the impact of about 1% from an extra week of sales this year. The company said it expects earnings per share of between $2.10 and $2.70, excluding non-recurring charges.
Here’s how the retailer performed in the quarter ended April 29 compared with Wall Street expectations, according to a Refinitiv survey of analysts:
- Earnings per share: 13 cents vs. expected loss of 42 cents
- Revenue: $3.36 billion vs. $3.34 billion
In the fiscal first quarter, Kohl’s net sales fell to $3.36 billion from $3.47 billion a year earlier.
Comparable sales fell 4.3% in the quarter, roughly in line with Wall Street expectations for a 4.5% decline, according to StreetAccount.
The company reported net income of $14 million, or 13 cents a share, compared with $14 million, or 11 cents a share, a year earlier.
Kohl’s surprise quarterly profit came after multiple quarters of disappointing sales and falling stock prices. The retailer was targeted by activist investors Ancora Holdings and Macellum Capital last year, prompting the company to oust then-CEO Michelle Gass and reshuffle its board. Kohl’s also discussed and closed a bid to sell its business to the owners of Vitamin Shoppe last year Join the group.
Since then, Kohl’s has named its new CEO Kingsbury, the former chief executive of the discount retailer burlington store. He served as interim CEO and later became permanent CEO following his predecessor, Garth, leave to be the next leader of Levi Strauss.
Kohl’s has hit other hurdles in recent months in its efforts to reinvent itself and attract shoppers. Many middle-income consumers felt squeezed by inflation, buying less discretionary items such as clothing.this contributed to Big loss for Cole’s holiday season and a weaker outlook, the Wisconsin-based company reiterated Wednesday.
Still, Kingsbury said Kohl’s made progress in the fiscal first quarter. Its inventory at the end of the quarter was $3.5 billion, down 6% year-over-year. Investors are keeping a close eye on those levels as a glut of merchandise at many retailers leads to steeper markdowns and lower profits.
On an analyst call, he said “middle-income customers are being squeezed,” but said Kohl’s could woo them by emphasizing value.
Kohl’s margins improved in the quarter as shipping and online shipping costs fell and the company became more strategic with markdowns. Kingsbury said the company wanted to simplify markdowns for customers, but also with targeted offers and clearances rather than blanket price cuts.
Shares of Kohl’s closed at $19.27 on Tuesday. That’s less than half of its 52 high of $47.63. Shares of the company have fallen nearly 23% so far this year — even as the S&P 500 has risen about 8% and retail-focused XRT has fallen nearly 2%.