Kohl's Stock Rises as Q1 Results Beat Low Expectations

Kohl's Stock Surges as Q1 Results Beat Low Expectations

Kohl's shares rose 19% in morning trading after the retailer reported quarterly results that were better than analysts expected. However, the results were still fairly dismal. Sales have declined for four years, falling 1.7% in the recently completed period. Areas that previously boosted sales, like Sephora shops in Kohl's stores, are now lagging. Kohl's is working to address these challenges by adding more newness, such as Korean skincare brands.

Store Sales Decline vs. Digital Growth

CEO Michael Bender told analysts that shoppers often couldn't find what they were looking for in stores, contributing to a decline in store sales compared with a gain in digital sales. Kohl's is adding more inventory to stores to ensure shoppers don't leave empty-handed. The company does not expect sales growth to turn positive this year, forecasting sales to be flat to down 2%.

Why the Stock Pop?

Analyst Oliver Chen of TD Cowen summarized the reaction in a note titled: 'Better Than Feared As Corrective Strategies Take Hold.' Kohl's said its same-store sales decline was the company's best performance in four years, a sign its turnaround continues to progress. Same-store sales fell 1.1%, better than the 1.7% decline analysts expected. The stock is on pace for its biggest daily gain since November, though it is still down 25% year-to-date.