Kohl’s (KSS) earnings Q12023

Kohl’s (KSS) earnings Q12023

People walk near the entrance of a Kohl’s department store in Doral, Florida on June 7, 2022.

Joe Raedle | Getty Images

cabbage Shares soared early Wednesday as the struggling retailer posted a surprise gain as it sought a turnaround.

The company’s shares are up more than 12% in premarket trading.

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Kohl’s reiterated its outlook for the full year. Expect a drop in net sales of between 2% and 4%, including the roughly 1% impact of another week of sales this year. The company expects earnings per share of between $2.10 and $2.70 (excluding one-time charges).

Here’s how the retailer compared to Wall Street expectations for the quarter ended April 29, based on an analyst poll by Refinitiv:

  • Earnings per share: 13 cents versus an expected loss of 42 cents
  • Revenue: $3.36 billion versus $3.34 billion

In the fiscal first quarter, Kohl’s net sales fell to $3.36 billion from $3.47 billion in the year-ago period.

According to StreetAccount, comparable sales declined 4.3% for the quarter, about in line with the 4.5% decline Wall Street was expecting.

The company reported net income of $14 million, or 13 cents a share, compared to $14 million, or 11 cents a share, a year ago.

Kohl’s surprise quarterly earnings come after several quarters of disappointing sales and a falling share price. Last year, the retailer became the target of activist investors Ancora Holdings and Macellum Capital, pushing the company to oust then-CEO Michelle Gass and overhaul its board. Kohl’s also discussed an offer to sell its business to Vitamin Shoppe-owner Franchise Group last year, then ended it.

Since then, Kohl’s has gained a new CEO: Tom Kingsbury, former CEO of off-price retailer Burlington Stores. Gass, the former CEO, left the company to become Levi Strauss’ next leader.

In recent months, Kohl’s efforts to reinvent itself and woo buyers have encountered other obstacles. Many middle-income consumers, feeling pressured by inflation, are buying fewer consumer items such as clothing. That contributed to Kohl’s large loss in the holiday quarter and a weak outlook, which the Wisconsin-based company reiterated on Wednesday.

Still, Kingsbury said Kohl’s made progress in the fiscal first quarter. He said the company has reduced overstock, attracted customers with Sephora shops, and made stores more productive.

“Our first quarter results were in line with our expectations and represented a first step on our path to increasing sales and earnings performance over the long term,” he said in a press release.

Inventory levels fell significantly compared to the same period of the previous year. Kohl’s inventories ended the quarter at $3.5 billion, down 6% year over year. Investors have been watching these levels closely as the glut has led to higher discounts and lower profits at many retailers.

Kohl’s shares closed at $19.27 on Tuesday. That’s less than half of its 52 high, which came in at $47.63. The company’s stock is down nearly 23% so far this year — even though the S&P 500 is up about 8% and the retail-focused XRT is down nearly 2%.