MENOMONEE FALLS, Wis. – Kohl’s stock price surged in early trading today, rising by 7% after the retail giant exceeded Wall Street’s earnings projections by $0.15 per share and raised its profit forecast. In an effort to enhance efficiency, Kohl’s focused on optimizing inventory management and cost control, resulting in a 9% decrease in inventory compared to the previous year. Company CEO Tom Kingsbury emphasized the commitment to increasing inventory turnover to remain competitive, especially during a highly competitive holiday season. CFO Jill Timm highlighted the importance of managing expenses in order to navigate the challenging consumer environment characterized by higher living costs.
Despite the positive earnings report, Kohl’s reduced its expectations for full-year sales growth due to economic challenges faced by its customer base. The company now anticipates a decline in same-store sales between 3% and 5% for fiscal year 2024, a larger decrease than previously projected. On a brighter note, Sephora at Kohl’s saw significant growth in Q2, with total sales for the beauty business surging by nearly 45% year over year. This success was driven by attracting younger customers and fostering cross-shopping behaviors, with around 35% of Sephora customers also purchasing Kohl’s products. As a strategic move, Kohl’s plans to relocate the junior section to the front of the store to align with the demographics attracted by Sephora.
Looking ahead, Kohl’s aims to achieve an operating margin between 3.4% and 3.8% by the end of 2024, with adjusted earnings per share ranging from $1.75 to $2.25. The company’s expansion of Sephora locations, surpassing 1,000 shops within Kohl’s, reflects its commitment to enhancing the customer experience and driving revenue growth. This growth strategy is underpinned by the success of Sephora in attracting new, younger shoppers to Kohl’s, creating a mutually beneficial shopping ecosystem within the stores. By capitalizing on the popularity of Sephora and leveraging its appeal to diverse customer segments, Kohl’s aims to strengthen its market position and drive sustained growth in the competitive retail landscape.