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Shares of Kohl’s (NYSE:KSS), which fell more than 10% on Tuesday, were up 2% in premarket trading as the company joined peer department store operator Macy’s (NYSE:M) to back its 2023 forecasts.
The company is in the midst of a turnaround under the watch of new CEO Tom Kingsbury, who has made leaner inventories and targeted discounts his top priority.
“Many of our strategic efforts are just underway, which we expect will contribute incrementally in the back half of the year, and even more so in 2024 and beyond,” said Kingsbury.
Inventory declined 14% during the quarter as Kohl’s undertook stock clearance, leading to a 61 basis points drop in gross margin.
Retailers are trying to keep their inventories tight with the right kind of product mix as they head into the second half of the year, which includes the crucial holiday spending season.
Kohl’s has expanded its partnership with the Sephora brand, which also helped its results.
“We maintained strong sales momentum in Sephora at Kohl’s, reduced inventory by 14%, and managed expenses tightly,” the CEO said.
The company earned 52 cents per share in the second quarter ended July 29, above analysts’ estimates of 22 cents.
The retailer maintained its forecast for per-share earnings of $2.10 to $2.70 and a drop in net sales of 2% to 4% for fiscal 2023.
