Kohl’s Q2 income surges even as sales continue to decline
Kohl’s Corp. reported a big earnings beat for its second quarter despite falling sales and suggested that its turnaround it beginning to take root.
The department store retailer also adjusted its full-year sales outlook on the year. Sales are now forecast to decline 5% to 6%, compared to its previous forecast of 5% to 7%.
On the company’s earnings call, Michael Bender, who was named interim CEO in May following the termination of Ashley Buchanan “for cause,” said that the retailer reduced its inventory, lowered expenses and gained better traction with customers in the quarter. He also said sales improved throughout the period, and were strongest in July, driven by digital business and proprietary brand sales
‘Kohl’s second quarter performance is a testament to the progress we are making against our 2025 initiatives,” Bender stated in the earnings release. “While it is clear that these initiatives are beginning to resonate with our customers, our team remains focused on delivering progressive improvement throughout the remainder of the year against a challenging economic backdrop.”
Kohl’s net income rose to $153 million, or $1.35 per share, for the quarter ended Aug.2, compared with $66 million, or $0.59 per share, in the year-ago period. Adjusting for one-time items, including the costs of store closures and gains from a legal settlement, earnings were $0.56 per share, topping analysts estimates of $0.29 per share.
Net sales decreased 5.1% to $3.3 billion, topping estimates of $3.32 billion. Comparable sales fell 4.2%.
Gross margin increased 28 basis points, which the company credited to greater penetration of proprietary brands, category mix benefits and improved inventory management. SG&A expenses decreased 4.1%.
"In addition to our top line progress, we managed the business with great discipline in the quarter,” Bender stated in the earnings release. We were able to expand our gross margins, reduce our inventory, and lower our expenses, leading to solid second quarter earnings."
