Kohl’s Corp. beat third-quarter profit expectations, citing inventory and expense management and growth in Sephora and other areas.
The department store chain reported that its net income fell to $111 million, or $0.53 a share, for the quarter ended Oct. 28, from $119 million, or $0.82 a share, in the year-ago period. Analysts had expected earnings of $0.35.
“Kohl’s third quarter earnings reflect strong gross margin and expense management as well as additional progress against our strategic priorities,” said Tom Kingsbury, who was named permanent CEO in February.
Net sales decreased 5.2% to $3.8 billion, missing estimates of $3.99 billion. Same-store sales fell 5.5%, more than expected. Gross margin improved 1.58 percentage points to 38.9%.
“I am pleased with our store performance driven by strong growth in Sephora and the newness in our home and gifting initiatives,” said Kingsbury. “This reinforces our actions are working and resonating with our customers. In addition, we drove a 13 percent reduction in inventory as we benefited from our new disciplines.”
Kingsbury said that efforts to reposition Kohl’s for improved sales and earnings performance remain in the early stages. Kohl’s reported its earnings the day after news broke that COO and president Dave Alves left the company, effective Nov. 17. He had served in the role since February 2023. On the company's earnings call, Kingsbury said that the position has been eliminated.
For fiscal 2023, Kohl’s lifted its earnings guidance to $2.30 to $2.70 per share from its previous range of $2.10 to $2.70 per share. But it cut its sales growth outlook to a decrease of 2.8% to 4.0% from its prior estimate of a 2% to 4.0% decrease.