Kohl’s said it is holding to its annual targets after releasing first-quarter results that matched analyst estimates. Management attributed early signs of progress to a combination of reduced operating expenses and changes to merchandising that aim to better engage the retailer’s core customer base.
The department store chain reported first-quarter net sales of $3.0 billion, a figure that was in line with consensus estimates, according to data compiled by LSEG. Kohl’s reiterated its outlook for the fiscal year, forecasting that annual net sales will either be flat or decline by as much as 2 percent. The company also maintained a projected full-year earnings per share range of $1.00 to $1.60.
Investors responded positively to the quarterly update, with Kohl’s shares rising by about 10 percent in premarket trading. The stock had previously experienced a dramatic run last year when it briefly doubled in value following a meme-stock-like rally.
Michael Bender, who was named permanent chief executive officer in November to oversee a turnaround after several years of declining sales and compressing profit margins, has prioritized several merchandising initiatives. Management has introduced fresher items, including fruits and vegetables, into its lower-priced store labels in an effort to keep lower- and middle-income shoppers engaged. At the same time, Kohl’s has been working to revive categories such as jewelry and accessories and has expanded its partnership with Sephora to draw back loyal customers and attract younger shoppers.
The company emphasized that its cost-cutting measures remain an important part of the plan to reinforce profitability. Kohl’s said these steps, combined with the merchandising and partnership initiatives, are beginning to produce benefits, although the company’s full-year guidance indicates it still expects revenues to be largely flat or modestly down.
Management left its EPS guidance unchanged, signaling that the firm anticipates earnings will fall within the previously stated range of $1.00 to $1.60 for the full year. The guidance and the top-line result reflect an outlook that contains both stabilization efforts and remaining uncertainty about consumer demand.
Summary
Kohl’s reaffirmed its full-year sales and earnings guidance after reporting Q1 net sales of $3.0 billion, in line with estimates. The retailer pointed to cost reductions and merchandising changes - including lower-priced fresh items, a renewed emphasis on jewelry and accessories, and a deeper Sephora partnership - as early contributors to its turnaround effort. Shares rose about 10 percent in premarket trading following the report.