Kohl’s (NYSE:KSS), the department store chain, reported on Wednesday that it experienced declines in both profits and sales during the second quarter, a consequence of consumers’ careful spending habits in a challenging economic climate.
Despite these challenges, the results managed to surpass Wall Street’s expectations, as the retailer effectively reduced its inventory and cut down on expenses. The department store chain also reaffirmed its annual guidance, leading to a more than 2% increase in premarket trading.
Headquartered in Menomonee Falls, Wisconsin, Kohl’s is one of the last groups of retailers to disclose their second-quarter outcomes within an earnings season marked by ongoing inflation concerns and higher interest rates. These factors have caused shoppers to tighten their discretionary spending, notably in categories like clothing, to balance increased grocery bills.
Recently, Macy’s acknowledged the need to offer discounts on its spring merchandise to create room for fall and holiday products, in response to cautious consumer spending. Nevertheless, the retailer managed to surpass Wall Street’s estimates for adjusted second-quarter profits and sales.
Foot Locker, in its fiscal second quarter, also experienced a decline in sales, prompting a revision of its full-year outlook and a suspension of its quarterly dividend, as consumer caution about spending persisted.
Nordstrom is scheduled to release its second-quarter results on Thursday.
For the quarter ending on July 29, Kohl’s reported earnings of $58 million, equivalent to 52 cents per share. In comparison, the same period in the previous year saw earnings of $143 million, or $1.11 per share.
The company disclosed a 14% reduction in inventory compared to the same period a year ago.
Total revenue for the quarter dipped to $3.9 billion from the previous year’s $4.09 billion.
According to FactSet analysts, expectations were set at 23 cents per share on revenue of $3.76 billion.
Comparable sales, which account for both in-store and digital purchases from locations that have been operational for at least a year, experienced a 5% decrease.
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Author Stephanie Bédard-Châteauneuf 
