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Kohl's Corp. experienced a significant surge following its unexpected profit announcement and successful handling of excess inventories in the first quarter. These early indications demonstrate that the efforts made by the new CEO, Tom Kingsbury, are beginning to yield positive results in improving the company's performance.
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Kohl's outperformed analyst expectations with earnings per share of 13 cents, surpassing a predicted loss of 40 cents per share. The first-quarter gross margin of 39% exceeded estimates of 36.93%. Inventories improved, declining 6% compared to 4% growth in the previous quarter. However, same-store sales dropped by 4.3% in the quarter, marking the fifth consecutive decline for Kohl's, indicating the need for further customer capture and growth strategies.
Why it matters
During the previous week, major retailers such as Walmart Inc., Target Corp., and Home Depot Inc. highlighted a decline in consumer spending during the first quarter of the year, particularly in non-essential product categories like clothing and household items. These categories are crucial for Kohl's. Along with the influence of overall economic conditions, Kohl's has been dealing with changes in leadership and adjusting its inventory levels, which have resulted in increased discounting and negatively affected profit margins.
