Madison, Wisconsin – Kohl’s, a retail company based in Wisconsin, experienced a surge in its shares during early trading, rising by as much as 7%. This increase followed the company surpassing Wall Street’s earnings expectations by 15 cents and revising its profit outlook for the future.
During the second quarter, Kohl’s focused on enhancing its inventory management and reducing expenses, resulting in a 9% decrease in year-over-year inventory levels. CEO Tom Kingsbury emphasized the company’s commitment to improving inventory turnover and decreasing inventory by mid-single digits to remain competitive during the upcoming holiday season.
Despite a challenging consumer environment impacting sales growth, particularly due to higher living costs affecting customer spending, Sephora at Kohl’s emerged as a promising aspect for the company. Sales for this business segment surged by nearly 45% in the second quarter compared to the previous year, with consistent sales growth in the low-teens.
Looking ahead to the end of 2024, Kohl’s anticipates operating margins between 3.4% to 3.8%, with adjusted earnings per share ranging from $1.75 to $2.25. The company did revise its full-year sales growth projections downward due to prevailing economic challenges, now expecting same-store sales to decrease by 3% to 5% for the fiscal year 2024.
In response to the success of Sephora at Kohl’s, the company expanded by adding 140 total locations in 2024, surpassing 1,000 Sephora shops within its stores. With a significant customer overlap between Sephora and Kohl’s, around 35% of Sephora baskets included products from Kohl’s. As Sephora attracts a younger demographic, the company plans to strategically position the juniors section at the front of the store to capitalize on this trend.
Overall, Kohl’s strategic focus on inventory management, cost control, and leveraging successful partnerships like Sephora demonstrates a proactive approach to navigating challenging market conditions and attracting a diverse customer base.