Kohl’s (KSS) shares are higher in early trading, jumping as much as 7% after the company beat Wall Street’s earnings expectations by $0.15 per share and raised its earnings outlook.
In the second quarter, the retailer stepped up its inventory management and expense efforts, leading to a 9% decline in inventory from a year earlier. It plans to remain “committed to increasing inventory turns and managing inventory in the mid-single digits,” CEO Tom Kingsbury told investors on a conference call.
All of this is in an effort to be “competitive during a very promotional holiday season,” said Chief Financial Officer Jill Timm.
Kohl’s expects to end 2024 with an operating margin of between 3.4% and 3.8% and adjusted earnings per share of between $1.75 and $2.25.
The company lowered its full-year sales growth forecast as a “challenging consumer environment” persists and Kohl’s customers feel “the burden” of a higher cost of living, leading them to spend less.
It now expects same-store sales to fall between 3% and 5% in fiscal 2024, more than the previously expected annual decline of 1% to 3%.
Sephora at Kohl’s continues to be a bright spot for the company. The company’s total sales jumped nearly 45% in the second quarter compared to a year earlier, with sales growth in the 15% range.
In 2024, the company added 140 total locations, surpassing Sephora’s 1,000 stores inside Kohl’s.
“We’ve seen a nice convergence in terms of customers shopping at Sephora,” Kingsbury said, adding that “nearly 35% of Sephora carts have another Kohl’s product in their cart.” As the beauty store attracts younger shoppers, he plans to move the junior section to the front of the store.
