Kohl’s Cuts Costs to Address a Challenging Consumer Environment

Kohl’s (KSS) shares rose Wednesday as cost reduction helped the retailer beat profit forecasts despite a drop in sales. 

Kohl’s reported second-quarter earnings per share (EPS) of 59 cents, 14 cents above the average estimate of analysts surveyed by Visible Alpha. Revenue fell 4.2% to $3.5 billion and comparable store sales slipped 5.1%. Both figures were below expectations. Selling, general, and administrative (SG&A) expenses also declined 4.2%, to $1.2 billion.

Kohl’s now sees full-year revenue down 6%, compared with an earlier prediction of a 4% fall. But it lifted its profit outlook for the year, to a range of $1.75 to $2.25 a share, up from a previous forecast of $1.25 to $1.85 per share.

Kohl’s anticipates that full-year comparable store sales will fall 5% versus the previous expectation of a decrease of 3%. 

Shares of Kohl’s, which edged higher Wednesday, have lost nearly a third of their value this year.

Affected by ‘Softness in Core Business’

Chief Executive Officer Tom Kingsbury said his company has taken “significant action to reposition Kohl’s for future growth.” However, he said the gains were muted in part because of “a continued challenging consumer environment and softness in our core business.”

Kingsbury added that during the quarter, shoppers “exhibited more discretion in their spending.” Even so, he said, the company’s “conviction in our strategy remains strong.”