Kohl’s Corp. raised its full-year outlook for the second straight quarter, adding to a steady stream of retailers reporting stronger-than-expected results.
Earnings have presented a split-screen image of consumer behaviour so far this quarter. Retailers like Kohl’s, which joined Best Buy Co., Abercrombie & Fitch Co. and Dick’s Sporting Goods Inc. in offering improved guidance on Tuesday, are proving that despite weakening consumer sentiment, shoppers are still willing to spend on brands they recognise and trust.
In another camp, however, chains like Home Depot Inc. and Target Corp. are seeing unsteady shoppers pull back in spending. US data released on Tuesday also showed that consumer spending lost steam in September.
“While customers continue to be thoughtful about big-ticket purchases in the current environment, they are willing to spend on high price-point products when they need to or when there is technology innovation,” Best Buy chief executive officer Corie Barry told analysts on a call. “Customers remain resilient but deal focused.”
Kohl’s now sees net sales declining in a range of 3.5 to 4 percent for the full year — a smaller drop than the projection offered in late August.
The retailer’s shares rose as much as 33 percent on Tuesday. Kohl’s stock had advanced 12 percent so far this year through Monday’s close.
Hollister, iPhone
Best Buy raised its revenue forecast for the year, as demand for products like the new iPhone 17 helped the retailer reverse a post-pandemic slump in revenue. Abercrombie lifted the low end of its full-year sales outlook as its Hollister brand continued to gain momentum.
Dick’s saw strength last quarter across its assortment, including in apparel and shoes, as it joined chains in boosting its forecast. But its shares were weighed down by the cost of turning around the Foot Locker chain it recently acquired.
Kohl’s outlook boost suggests that the retailer, which sells brand names like Nike and has a lucrative tie-up with Sephora, is moving past its recent turbulence, which culminated in the abrupt departure of its previous chief executive officer after only a short period at the company.
The company still faces a tough path — it has now posted 15 straight quarters of declining year-over-year revenue. But the latest results show improvement, with the company citing a value proposition that is resonating with consumers.
Permanent CEO
This week, Michael Bender was named as the company’s permanent CEO. Previously, he had been serving on an interim basis.
In the third quarter, comparable sales fell 1.7 percent, better than the average of analyst estimates.
Bender has largely executed a strategy initially set by his predecessor, Ashley Buchanan, which included a focus on reviving the jewellery business as well as selling more petite sizes. The store’s in-house labels grew 1 percent in the quarter.
Retailers have warned that some consumers are pulling back and spending more cautiously, while certain higher-income shoppers have traded down to cheaper goods. That trend may benefit Kohl’s which offers prices that in general are lower than many department stores.
By Lily Meier, Jeannette Neumann and Redd Brown
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