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Kohl's Shares Hiked On Unexpected Earnings As The CEO's Turnaround Strategy Takes Hold

Kohl's Shares Hiked On Unexpected Earnings As The CEO's Turnaround Strategy Takes Hold
The department store chain's shares increased by as much as 19% after Kohl's Corp. revealed a surprise profit and its new CEO's attempts to turn around the business, which saw its margins decline last year, started to bear fruit.
Despite reporting a larger-than-anticipated decline in quarterly comparable store sales, the firm also maintained its full-year forecasts.
Kohl's is gaining from CEO Tom Kingsbury's initiatives to shift the company's focus away from margin-eroding bargains and towards in-demand product categories like work apparel.
The third quarter represented, in the words of Fitch analyst David Silverman, "a step in the right direction for Kohl's to position 2023 as a year of operating income and cash flow growth."
Following the release of additional financial results, which included a 67 basis point increase in quarterly gross margin from a year earlier and a decrease in operating expenses, Kohl's shares, which lost about half of their value in 2022, increased around 8% to $20.86.
According to Refinitiv IBES statistics, earnings per share came in at 13 cents, above analysts' average forecast of a loss of 42 cents.
On January 25, 2022, the Kohl's label can be seen on a shopping cart in a Kohl's department store in the Brooklyn neighbourhood of New York, USA. Brendan McDermid for Reuters
Additionally, the company's inventory decreased by 6%, versus a 4% increase in the previous quarter.
"We made progress against each of our key priorities for 2023 despite continuing to operate in a challenging macroeconomic backdrop ... it will take time for the full impact of our efforts to be realized," Kingsbury said on an analyst call.
Kohl's kept their sales and profit projections for the whole of 2023.
"The middle-income customer is being squeezed," Kohl's Kingsbury said, as the company flagged weaker consumer spending.
A slowdown in demand is affecting a number of U.S. merchants as consumers cut back on non-essential purchases after being hammered by inflation. In their yearly estimates, Target and the home improvement retailer Home Depot (HD.N) have adopted a cautious stance.
Compared to expectations of a 3.9% loss, Kohl's first-quarter comparable sales fell by 4.3% as a result of the difficult retail environment.

Christopher J. Mitchell

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