(Reuters) -Kohl's raised its annual profit forecast on Wednesday as the U.S. department store chain's years-long turnaround reduces costs and its fresher product line-up brings back customers, sending its shares up 17% in premarket trading.
The company closed an e-fulfillment center in Ohio earlier this year and is downsizing its in-store jewelry business, as well as trimming inventory of its own brands to include fresher products.
The second straight sales beat signals efforts to closely reassess
its product assortment and operational costs are starting to pay off, despite the turmoil at the top.
Kohl's said on Wednesday it expects annual earnings per share of 50 cents to 80 cents, compared with its earlier wide range of 10 cents to 60 cents.
"We were able to expand our gross margins, reduce our inventory, and lower our expenses, leading to solid second-quarter earnings," said interim CEO Michael Bender.
Kohl's second-quarter adjusted earnings per share of 56 cents handily beat estimates of 29 cents, according to data compiled by LSEG.
The company is also offering more coupons for branded products, hoping to keep its lower and middle-income consumers engaged, at a time when tariffs and inflation have squeezed budgets, adversely impacting mid-tier retailers such as department stores.
Kohl's completed launching LVMH-owned high-end beauty chain Sephora at all its more than 1,100 stores in the U.S. earlier this year, as the beauty business remains a bright spot for the department store operator.
For the quarter ended August 2, comparable sales fell 4.2%, smaller than estimates of a 5% decline, while its net sales also topped expectations.
The Wisconsin-based company also tightened its forecast for annual and comparable sales, while raising its operating margin target for 2025.
(Reporting by Juveria Tabassum and Sanskriti Shekhar; Editing by Sriraj Kalluvila)
