Key Takeaways
- Discount department store operator Kohl's posted better-than-expected second-quarter profit thanks to cost cuts despite a drop in sales.
- Kohl's warned about a tough consumer environment but raised its full-year earnings per share outlook.
- Kohl's shares rose slightly on Wednesday but have lost nearly a third of their value this year.
Kohl's (KSS) shares rose on Wednesday after cost-cutting helped the company beat profit expectations despite a drop in sales.
Kohl's reported second-quarter earnings of 59 cents a share, beating the average estimate of analysts surveyed by Visible Alpha by 14 cents. Revenue fell 4.2% to $3.5 billion, and same-store sales fell 5.1%, both of which missed expectations. Selling, general and administrative expenses (SG&A) also decreased 4.2% to $1.2 billion.
Kohl's now expects full-year sales to fall 6%, down from an earlier 4% decline, but raised its full-year profit outlook to $1.75 to $2.25 a share, up from a previous forecast of $1.25 to $1.85.
Kohl's now expects full-year same-store sales to fall 5%, compared with its previous forecast of a 3% decline.
Kohl's shares, which rose slightly on Wednesday, have lost nearly a third of their value so far this year.
Impact of “weakness in core business”
Chief Executive Officer Tom Kingsbury said the company had taken “significant steps to position Kohl's for future growth,” but he attributed the slowdown in profits to “the continued challenging consumer environment and weakness in our core businesses.”
Kingsbury added that shoppers “became more cautious about their spending” during the quarter, but said the company's “conviction in our strategy remains strong.”