(Reuters) – Kohl’s reported a surprise first-quarter profit on Wednesday as the department store chain reduced excess inventory and lowered costs under the leadership of its new chief executive.
Earnings per share were 13 cents, as analysts on average expected a loss of 42 cents, while operating expenses fell 4.2% to $1.2 billion (1.09 billion euros).
The title Kohl’s climbed 12% in pre-market trading on Wall Street.
The company also stuck to its full-year guidance, though it saw a bigger-than-expected decline in same-store sales in the quarter.
The distributor is indeed trying to recover under the leadership of its new general manager Tom Kingsbury, who took the reins of the company in February.
To ensure a constant level of its sales and profits, Kohl’s wants to avoid discounts which aim to sell off inventory but which reduce margins, to concentrate production on the categories most in demand, in particular workwear.
Kohl’s reported gross margin up 67 basis points in the first quarter as the company struggled to manage inventory, which was down 6% year-over-year.
However, inflation, which is pushing consumers to limit non-essential purchases, drove Kohl’s comparable sales down 4.3% in the first quarter. Analysts on average had expected a decline of 3.9%, according to IBES data from Refinitiv.
The chain of stores held its earnings per share for fiscal 2023 in the range of $2.10 to $2.70, and its operating margin at around 4%.
(Written by Savyata Mishra in Bangalore; Victor Goury-Laffont, editing by Kate Entringer)
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