Kohl’s Corp., continuing to press for a turnaround in the aftermath of firing its chief executive officer earlier this month, managed to narrow its loss in the first quarter amid sales declines that weren’t as bad as expected.
The Menomonee Falls, Wis.-based Kohl’s reported a net loss of $15 million, or 13 cents per diluted share, for the period ended May 3, compared to a net loss of $27 million, or 24 cents per diluted share, in the year-ago period. A loss of 22 cents a share was anticipated.
Operating income increased to $60 million in the first quarter compared to $43 million in the year-ago quarter. As a percentage of total revenue, operating income was 1.9 percent, an increase of 58 basis points year-over-year.
Kohl’s also managed to slightly beat expectations on the sales side, reporting net sales decreased 4.1 percent year-over-year, to $3.05 billion from $3.18 billion in the year-ago period. Kohl’s was expected to report sales coming in at $3.02 billion. Comparable sales last quarter were down 3.9 percent.
You May Also Like
Selling, general and administrative (SG&A) expenses decreased 5.2 percent year-over-year, to $1.2 billion. As a percentage of total revenue, SG&A expenses were 36 percent, a decrease of 32 basis points year-over-year.
The results pushed Kohl’s stock price up 5 percent, or 40 cents, to $8.40 in pre-market trading Thursday.
“Our first-quarter performance was ahead of our expectations and the actions we are taking are starting to make progress with early signs of a positive impact,” Michael Bender, Kohl’s interim CEO, said in a statement Thursday morning. “Our team is focused and motivated to deliver great products, great value, and a great shopping experience to our customers. I want to thank our amazing team of associates for their hard work and dedication. I am excited to lead this next chapter of Kohl’s and build on the momentum we have begun to generate.”
On May 1, Kohl’s fired CEO Ashley Buchanan on grounds that he directed the company to conduct business with a coffee start-up called Incredibrew which was founded and run by his girlfriend, Chandra Holt. Kohl’s indicated that the terms were very favorable to the coffee company, and that Buchanan did not disclose his relationship to Holt. Buchanan also directed Kohl’s to enter into a consulting agreement with the Boston Consulting Group, where Holt was once an adviser.
Before he was fired, Buchanan came up with a turnaround plan for Kohl’s that had it bolstering proprietary brands, which generally provide greater value for shoppers and better margins for retailers. Sonoma for apparel and FLX for activewear are two of the company’s best private brands. Buchanan’s plan also called for restoring discontinued categories and deals on coupons within the private brand program, and putting more attention on fine jewelry, home decor, petites, impulse items, and Sephora beauty areas.
Kohl’s has also made significant real estate changes this year, including the closure of its long-standing San Bernardino, Calif., e-commerce fulfillment center and 27 retail locations. The retailer still operates roughly 1,000 stores and e-commerce.
Aside from getting fired, Buchanan must forfeit all equity awards he received from the company, including the recruitment awards made in January. Buchanan must also reimburse Kohl’s for a pro rata portion of his signing incentive in the amount of $2.5 million.
In his statement Thursday, Bender said, “I am honored to assume the role of interim CEO at such an important time for our company. Kohl’s has a tremendous opportunity to build on our strong foundation of over 1,100 conveniently located stores and a large and loyal customer base.”
Kohl’s affirmed its outlook for 2025, projecting net sales to decrease 5 to 7 percent; comparable sales to decrease 4 to 6 percent; operating margin in the range of 2.2 to 2.6 percent, and diluted earnings per share in the range of 10 cents to 60 cents.
