Kohl’s Stock Surges Over 20% Following Strong Earnings Beat

Kohl’s shares jumped over 20% on Wednesday following a strong second-quarter earnings report that surpassed Wall Street’s expectations for both earnings and revenue, even as the retailer faced declining sales and ongoing CEO changes. The Wisconsin-based department store reported a net income of $153 million, or $1.35 per share, compared to $66 million, or 59 cents per share, in the same quarter last year. Net sales fell from $3.53 billion in the prior-year quarter, reflecting the ongoing challenges in the retail sector.

To account for recent performance, Kohl’s narrowed its full-year sales guidance, projecting a decline of 5% to 6%, slightly better than its previous expectation of 5% to 7% decline. The company also revised its full-year earnings per share guidance, now expecting earnings in the range of 50 to 80 cents per share, adjusted. Earlier, the outlook was 10 to 60 cents per share, unadjusted, making it somewhat unclear how the new guidance compares directly to the prior projection.

Despite the earnings beat, Kohl’s has faced significant challenges over recent years, including slumping shares and declining sales. Annual revenue has fallen for three consecutive years, and the company’s market value, which was just under $7 billion at the end of 2021, has dropped to roughly $1.5 billion. Leadership instability has further complicated the turnaround process, with the retailer having three different CEOs over the past three years.

The leadership transitions began in late 2022, when then-CEO Michelle Gass left to become president and eventual CEO of Levi Strauss. Tom Kingsbury, a board member and former CEO of Burlington Stores, succeeded her. However, in November, Kohl’s announced Kingsbury would step down after two years, appointing Ashley Buchanan, formerly CEO of Michaels and a veteran of Walmart and Sam’s Club, as his successor. Less than four months into the role, Buchanan was fired following an investigation that found he pushed for deals with a vendor owned by his girlfriend. Kohl’s then named Michael Bender, a board member since 2019, as interim CEO.

Financial concerns have also surfaced, with Kohl’s adjusting its payment terms with vendors, a common retail practice to extend payment periods and conserve cash. While the company did not disclose specific changes, it noted that it regularly reviews operations to maximize efficiency and informed some vendors about updated terms in March.

Interim CEO Michael Bender highlighted positive progress in the second quarter, stating that results reflect the company’s advancement toward its 2025 initiatives. Kohl’s reduced inventory to $3 billion at the end of the quarter, a 5% drop from the prior year, lowered expenses, and improved customer engagement. To boost sales, the retailer has been expanding specific departments, including petites and fine jewelry, carrying more exclusive merchandise, and revamping promotions so discounts apply to a broader range of brands. Kohl’s has also added Sephora shops to all its stores to enhance the shopping experience.

Despite these efforts, sales continued to decline in the second quarter. Comparable sales, which exclude one-time factors like store openings or closures, fell 4.2% compared to the year-ago period. Analysts noted that while the earnings beat signals operational improvements, Kohl’s still faces challenges in reversing long-term sales declines and stabilizing leadership.

Overall, Kohl’s strong second-quarter earnings provide a positive short-term outlook and investor confidence, but ongoing leadership transitions, declining sales, and market value erosion highlight the need for sustained strategic initiatives to secure long-term growth.