Kohl’s Manages To Beat Expectations

Kohl’s gave investors an early look at their earnings with a glimpse at some unexpected good news: a surprise bump in profits as gross margin expanded during last quarter. This indicates that plans to be rid of excess inventory are proceeding as expected. The Street liked the report, as shares were up 14 percent in midday trading. Kohl’s is the second name-brand department store to announce better than expected earnings this week, following Macy’s reporting the previous day.

Positive news aside, however, Kohl’s cut its earnings forecast for the year, as same-store sales were still plagued by falling numbers. In fact, those comparable sales went down more than expected during the last quarter, meaning Kohl’s is only expecting to earn $3.80 to $4 per share this year, as opposed to $4.05 to $4.25. That isn’t great news, but it is a result analysts had already been predicting since Kohl’s across the board bad news report last quarter.

According to the data they released, sales growth at established locations was down 1.8 percent during the quarter, as opposed to a .1 percent increase at the same time last year. Kohl’s also said foot traffic declined in the period.

Investors, it seems, were more focused on the top line numbers, and the bounce in share price reflected some confidence that turnaround can be effected.
“Directionally, the quarter pointed the right way,” noted Efraim Levy, an equity analyst with S&P Global. “But I don’t think that Kohl’s or the retail sector is out of the woods.”


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