Kohl’s Corporation saw its stock rise by 20% following an announcement highlighting progress in its efforts to improve sales trends. The retailer reported its strongest comparable sales performance in four years, signaling what CEO Michael Bender described as being "on the door of growth."
"We showed that we are managing the business with great discipline, strong expense management, our inventory is much cleaner than it’s ever been and the balance sheet continues to show strength", Bender said in an interview with CNBC.
Modest Sales Decline Amid Improved Projections
The company revealed that net sales fell by 1.7% in its fiscal first quarter, while comparable sales dropped by 1.1%. However, this represented a notable improvement from the prior quarter, during which comparable sales declined by 2.8% year-over-year.
In terms of financial performance, Kohl’s reported a net loss of $14 million, or 13 cents per share, for the period ending May 2. This was consistent with the loss of $15 million, or 13 cents per share, recorded during the same period last year. Total revenue slipped to $3 billion, down from $3.05 billion reported a year earlier. Despite these declines, the results exceeded Wall Street expectations, with analysts surveyed by LSEG forecasting a loss of 19 cents per share on $2.99 billion in revenue.
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Strategic Outlook and Customer Behavior Insights
Kohl’s maintained its full-year outlook, projecting net sales and comparable sales to range from a 2% decline to flat growth. The retailer also reaffirmed its adjusted earnings per share forecast of $1 to $1.60.
Bender emphasized that while progress is being made, the company remains focused on further improvements. "We’re not done", he said. "I think it’s really important to underscore that as well, that we love the trajectory of where things are headed, but we know we still have a lot of work ahead of us."
The company credited its proprietary brands and the performance of its Kohl’s card customer segment for driving "meaningful improvement." However, Bender noted that macroeconomic pressures such as inflation and high gas prices continue to influence the spending habits of the retailer’s core lower- and middle-income clientele.
"There are families [that] are sitting around the kitchen table right now, trying to make life work, particularly amid the backdrop context of higher energy prices, labor market challenges, and it just means that we have to continue to lean into value more and more and more", Bender explained.
Operational Adjustments and Potential Refund Windfall
In response to these challenges, Kohl’s is prioritizing improvements to its store experience and inventory management to better meet customer needs. Additionally, the company confirmed it has applied for tariff refunds, which could potentially amount to $190 million. However, Kohl’s has not yet received any of these funds.
Despite facing a 35% drop in stock value earlier in the year, the recent uptick demonstrates renewed optimism among investors as the retailer works to stabilize its business and regain market share.
