Despite lower earnings and comparable sales, Kohl’s beat Wall Street estimates for the second quarter, and the company looks forward to growth with home goods as an important contributor.
Net income was $58 million, or 52 cents per diluted share, versus $143 million, or $1.11 per share, in the year-previous quarter, the company noted.
A second-quarter analyst consensus estimate published by Yahoo Finance anticipated earnings per diluted share of 22 cents and revenues of $3.69 billion.
Comparable sales slipped 5% in the quarter year over year, Kohl’s reported. Net sales were $3.68 billion versus $3.86 billion in the year-prior quarter while total revenue was $3.9 billion versus $4.09 billion. Operating income was $163 million versus $266 million in the year-earlier period.
Tom Kingsbury, Kohl’s CEO, said in a conference call that the company continues to progress in “efforts to significantly improve Kohl’s performance over the long-term” despite the macroeconomic pressures on customers. He said the company would continue to pursue four strategic priorities: enhancing the customer experience, accelerating and simplifying value strategies, managing inventory and expenses with discipline and strengthening the balance sheet.
“We are confident that our strategies will drive sales and earnings performance,” he said. “It will take some time for the full impact of our efforts to be realized. However, our objective is to show incremental improvement in the back half of the year with even more benefit in 2024 and beyond.”
Kingsbury pointed out, “Our home business, which we’ve highlighted as a major long-term opportunity for Kohl’s, showed strong relative improvement in the quarter.”
In terms of related segments, he rated gifting and home decor to be among the most significant contributors to Kohl’s growth moving forward.
In announcing the financial results, Kingsbury said. “Our second-quarter earnings were in line with our expectations. We maintained strong sales momentum in Sephora at Kohl’s, reduced inventory by 14% and managed expenses tightly. Further, solid cash flow generation allowed us to reduce our borrowings in the period. Many of our strategic efforts are just underway, which we expect will contribute incrementally in the back half of the year, and even more so in 2024 and beyond. We have enhanced the store experience and recently opened an additional 200 Sephora at Kohl’s shops, and are taking steps to further optimize our assortment and simplify our value strategies. Looking ahead, we are reaffirming our 2023 guidance and remain confident in our longer-term opportunity.”
