Kohl's Corporation (NYSE:KSS) has sprung a surprise first-quarter profit, sending its shares sharply higher in pre-market trading.
The department store operator, which is undergoing a turnaround under new CEO Tom Kingsbury, reported a larger-than-expected 3.3% decline in sales to $3.4 billion for the 13 weeks to April 29, 2023, with comparable sales down 4.3%.
However, it’s gross margin as a percentage of sales improved by 67 basis points to 39% and it trimmed selling, general and administrative (SG&A) expenses by 4.2% to $1.2 billion. Net income was steady at $14 million, while net income per share rose 18% to $0.13. Wall Street analysts had forecast a $0.42 loss for the quarter.
“Our first quarter results were in line with our expectations and represented a first step as we work to drive sales and earnings performance over the long term,” Kingsbury said in an earnings statement.
“We delivered margin expansion, as well as a 6% reduction in inventory. In addition, our stores' business achieved productivity gains and Sephora at Kohl’s continued its sales momentum.”
For the full year, the company has guided for a 2% to 4% decline in net sales, including the impact of an additional week. It expects diluted earnings per share of between $2.10 and $2.70, excluding any non-recurring charges.
“We are making progress against each of our key 2023 priorities, enhancing our customer experience, simplifying our value strategies, managing inventory and expenses with discipline, and strengthening our balance sheet,” Kingsbury added.
Kohl’s shares were up 13% at $21.75 in pre-market trading.
Contact the author at stephen.gunnion@proactiveinvestors.com