Key Takeaways:
- Net loss of $0.13 a share beat the $0.22 consensus estimate.
- Comparable sales fell 1.1%, topping expectations for a 1.8% decline.
- The retailer maintained its full-year guidance for net sales and earnings.
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Kohl's beats Q1 loss estimates on best comparable sales in 4 years
Kohl's reported a narrower-than-expected first-quarter loss of $0.13 a share, as comparable sales posted the strongest performance in more than four years.
"We delivered our strongest quarterly comparable sales performance in more than four years, driven by gains in proprietary brands, improved inventory management and stabilization among our Kohl's Card customers," executives said on the earnings call.
Net sales fell 1.7% to $3.0 billion, while comparable sales declined 1.1% — better than the 1.8% drop analysts had projected, according to S&P Global Market Intelligence. Gross margin edged up 4 basis points to 39.9%. Operating income fell to $46 million from $60 million, and operating margin slipped to 1.4% from 1.8%.
The results sent Kohl's shares up as much as 12% in premarket trading. The department-store chain maintained its full-year outlook, forecasting net sales to decline 2% to be flat and adjusted earnings of $1.00 to $1.60 a share.
Inventory ended the quarter at $2.9 billion, down 8% from a year earlier, reflecting tighter management. Borrowings under the company's revolving credit facility stood at zero, compared with $545 million a year ago. Selling, general and administrative expenses declined 1.6% to $1.1 billion but rose to 36.2% of total revenue, up 15 basis points year over year.
The narrower loss signals that Kohl's turnaround efforts are gaining traction after years of declining sales. Investors will watch whether the retailer can sustain comparable sales momentum through the back-to-school and holiday seasons, typically the most critical periods for department stores.
This article is for informational purposes only and does not constitute investment advice.
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