Kohl’s Corp. soared after it reported a surprise profit and addressed bloated inventories in the first quarter, early signs that the new chief executive officer’s efforts are paying off.
(Bloomberg) — Kohl’s Corp. soared after it reported a surprise profit and addressed bloated inventories in the first quarter, early signs that the new chief executive officer’s efforts are paying off.
The results suggest that efforts to improve performance by CEO Tom Kingsbury, who assumed the role in February, are starting to pay off.
“We are making progress against each of our key 2023 priorities,” he said in a statement, noting inventory management and expense discipline.
Earnings per share of 13 cents beat analyst expectations for a 40-cent-per-share loss. Gross margin of 39% in the first quarter came in above estimates of 36.93%. Inventories, meanwhile, declined 6% in the first three months of the year, an improvement from 4% growth in the fourth quarter.
The shares rose 13% in early trading in New York.
Retailers including Walmart Inc., Target Corp. and Home Depot Inc. over the past week have pointed to weaker consumer spending in the first three months of the year, particularly in discretionary categories like apparel and home goods, key areas for Kohl’s.
In addition to the impact of broader macroeconomic trends, Kohl’s has been adjusting to management changes as well as merchandise levels that have led to discounting and hurt margins.
Same-store sales fell 4.3% in the quarter ended April 29, below the 3.9% average decline expected by analysts. This is the fifth consecutive same-store sales drop for Kohl’s, meaning it still has work to do to capture customers and keep growing.
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