Kohl’s Corp. last quarter continued to yield sales and profit declines, but raised its bottom-line outlook for the year and cited progress on turnaround strategies.
On Tuesday, the Menomonee Falls, Wisc.-based retailer reported that its net income for the quarter ended Oct. 28 fell to $59 million, or 53 cents per diluted share, beating expectations of 35 cents. In the year-ago period, net income reached $97 million, or 82 cents per diluted share.
Operating income was $157 million compared to $200 million in the prior year. As a percentage of total revenue, operating income was 3.9 percent, a decrease of 82 basis points year-over-year.
Net sales decreased 5.2 percent year-over-year, to $3.8 billion, with comparable sales down 5.5 percent. The sales results missed Wall Street expectations of $3.99 billion.
Still, while citing strong inventory and expense management, the company raised its forecast for diluted earnings per share for the year to $2.30 to $2.70, excluding any non-recurring charges. This compares to the prior guidance range of $2.10 to $2.70.
The forecast on sales for the year, however, was changed to a decrease of 2.8 to 4 percent, and includes the impact of the 53rd week, which is worth approximately 1 percent year-over-year. This compares to the prior guidance of a decrease of 2 to 4 percent.
In pre-market trading Tuesday morning around 7:30 a.m., Kohl’s stock was down about 2 percent or 76 cents to $24.10.
“Kohl’s third-quarter earnings reflect strong gross margin and expense management as well as additional progress against our strategic priorities,” Tom Kingsbury, Kohl’s chief executive officer, said in a statement. “I am pleased with our store performance driven by strong growth in Sephora and the newness in our home and gifting initiatives. This reinforces our actions are working and resonating with our customers. In addition, we drove a 13 percent reduction in inventory as we benefited from our new disciplines.
“Our strategies to reposition Kohl’s for improved sales and earnings performance remain in the early stages. The work we have done in 2023 will continue to build momentum and set us up to be successful in 2024. I continue to be impressed with the entire Kohl’s team for their hard work and agility in executing against our strategic priorities in 2023,” Kingsbury continued.
In other updates on its financial outlook, Kohl’s indicated that it currently expects operating margin at approximately 4 percent, which is consistent with the prior guidance.
Capital expenditures are seen towards the lower end of $600 million to $650 million, including expansion of its Sephora partnership and store refresh activity.
In one major change, Dave Alves, the president and chief operating officer, left the company on Friday after less than a year on the job. The company said Alves left to pursue other opportunities and that it would not backfill the position.
