Coles (KSS) shares rose in early trading, jumping about 7%, after the company beat Wall Street earnings expectations by about 15 cents and raised its earnings forecast.
In the second quarter, the company doubled down on inventory and expense management, leading to a 9% year-over-year decline in inventory. “It plans to remain committed to increasing inventory turnover and inventory management to the mid-single digits,” CEO Tom Kingsbury told investors on a conference call.
It’s all part of an effort to “increase competitiveness during the highly promotional holiday season,” said CFO Jill Timm.
Kohl’s expects to end 2024 with an operating margin of 3.4% to 3.8%, along with adjusted earnings per share in the range of $1.75 to $2.25.
The company lowered its full-year sales growth outlook as a “challenging consumer environment” persists and Kohl’s customers feel the “burden” of higher living costs, prompting them to put less in their shopping carts in the second quarter.
The company now expects same-store sales to decline 3% to 5% for fiscal 2024, up from the previously forecast 1% to 3% annual decline.
Sephora at Kohl’s remains a bright spot for the company. The company’s overall sales rose about 45% in the second quarter year over year, with sales growth at a record low.
In 2024, the company added 140 total locations, surpassing the 1,000 Sephora stores inside Kohl’s.
“We’ve seen a huge jump in the number of customers shopping at Sephora,” Kingsbury said, adding that “about 35 percent of Sephora baskets have another Kohl’s product in their basket.” As the beauty store attracts younger shoppers, he plans to move the kids’ section to the front of the store.
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