Kohl’s Corporation has seen a surge in its stock price, jumping over 20% after reporting better-than-expected earnings for the fiscal second quarter. The company reported earnings of 56 cents a share, adjusted, with revenues of $3.35 billion, well above Wall Street’s lofty expectations. This admirable financial performance is set against an existential crisis still playing out. For the last three years, we’ve been battling a cut in our annual revenue and a drop in same store sales.
In March, Kohl’s announced new, extended payment terms for a number of vendors. Besides simplifying operations, this change is expected to increase cash flow. The company’s hard financial reality has only been muddled by leadership turnover. Michelle Gass departed her role as chief executive at the end of 2022. She is currently the president and will soon move into the top post of CEO at Levi Strauss. The former leader of Burlington Coat Factory, Tom Kingsbury has been running her old turf but is stepping down himself as CEO. Ashley Buchanan will replace him as of November.
Kohl’s raised its full-year sales guidance, raising the bar as it grows increasingly confident. They have refined that forecast to emphasize the high end of their original range. The company lowered its guidance for fiscal year 2020, from a previously projected 5% to 7% sales decline. It did lower its adjusted earnings per share guidance to a range of 50 cents to 80 cents. Indeed, Kohl’s just announced a 4.2% drop in comparable sales from the same quarter last year.
The company ended the quarter with an inventory level of $3 billion. This funding is a 5% cut from last year. This drastic inventory reduction is on-brand with Kohl’s new strategy to reduce costs during the boom-bust consumer demand cycle.
Interim CEO Michael Bender commented on the fiscal second quarter’s results, stating that they serve as “a testament to the progress we are making against our 2025 initiatives.” His remarks highlight the company’s commitment to long-term strategic goals even as it navigates through leadership transitions and market challenges.
To be sure, Kohl’s has gone through enormous tumult in its executive ranks, having had three chiefs in as many years. The turmoil hit a new low when CEO Ashley Buchanan was abruptly dismissed from her position. An unrelated investigation revealed that he had been trying to broker contracts with a company owned by his girlfriend. This incident further underscored the need for stable leadership as Kohl’s attempts to recover from declining sales and establish a stronger market presence.
With an uphill battle against these burdens, Kohl’s wants to make a comeback on the department store landscape. The company’s proactive adjustments in inventory management and its revised earnings guidance signal a determination to turn around its fortunes.