Kohl’s Corp. shares surged after it offered a more optimistic full-year sales outlook, a sign that the troubled retailer’s turnaround efforts are gaining traction.
Bloomberg
The company now expects comparable sales to be down no more than 5% this year, less than its prior forecast for a decline of as much as 6%. The company also reported second-quarter sales that were better than Wall Street estimates.
Shares of the Menomonee Falls, Wisconsin-based company rose as much as 19% as of 7:30 a.m. in early New York trading. The stock had declined 7.1% this year through Tuesday’s close.
The latest results suggest that recent moves, such as focusing on fine jewelry and improving its womenswear selection, are helping Kohl’s win back consumers. Kohl’s has looked to tie-ups with brands such as Sephora and Babies “R” Us to help drive spending and shopper traffic.
The company has also improved in-stock levels for its own cheaper private brands, according to Bloomberg Intelligence.
Same-store sales fell 4.2% in the second quarter, less than the 5% decline estimated by analysts.
The result was better than the company expected and shows the chain’s “initiatives are beginning to resonate with our customers,” Michael Bender, Kohl’s interim chief executive officer, said in the statement.
The chain is looking to reverse 14 straight quarters of declining revenue amid intense competition for retail dollars and upheaval in its corporate ranks. Kohl’s is looking for a new chief executive officer after firing the previous CEO for directing millions of dollars to a romantic partner. Prior to that move, the retailer cut 10% of corporate jobs.
Bloomberg News reported on Tuesday that Kohl’s has asked some vendors for more time to settle invoices. Retailers will typically seek longer payment terms to manage working capital swings and conserve cash.
Bender took over when the retailer announced on May 1 the termination of CEO Ashley Buchanan.
According to a company filing, Buchanan directed Kohl’s to conduct business with a vendor founded by someone with whom he has had a relationship — the nature of which was romantic, Bloomberg previously reported. He caused the retailer to enter a multimillion-dollar consulting agreement where “the same individual was a part of the consulting team,” the filing said.
Kohl’s has more than $2 billion of debt, including the recent issuance of $360 million of junk bonds in which proceeds were earmarked to meet obligations coming due this year.
