Kohl’s Corporation (NYSE: KSS) shares surged more than 20% on Wednesday after the struggling department store chain delivered a rare earnings beat and raised its full-year profit guidance, sparking renewed investor optimism about its turnaround efforts.
The retailer posted second-quarter adjusted earnings of $0.56 per share, nearly doubling Wall Street expectations of around $0.30.
Revenue, which came in at $3.45 billion, modestly topped estimates despite declining 5% year-over-year.
Kohl’s also raised its 2025 earnings outlook, now projecting between $0.50 and $0.80 per share, up from the previous range of $0.10 to $0.60.
The company narrowed its forecast for same-store sales declines to 4–5%, signaling gradual stabilization.
Strategic Shifts Paying Off
Executives attributed the strong quarter to cost-cutting measures, disciplined inventory management, and merchandising changes.
Initiatives such as Sephora shop-in-shops and redesigned checkout areas aimed at encouraging impulse buys have boosted average basket size.
The company also closed a fulfillment center, trimmed private-label exposure, and reduced in-store jewelry assortments—moves designed to streamline operations and lift margins.
“Our results reflect the early success of our turnaround strategy,” management said in a statement. “We are becoming a leaner, more customer-focused organization.”
Lingering Concerns
Despite the market rally, questions remain about Kohl’s long-term resilience. The retailer has faced multi-year sales declines, shrinking cash flow, and frequent CEO turnover—with five leadership changes in the past decade.
Just a day before the earnings release, reports of delayed vendor payments rattled investors and sent shares down nearly 7%.
Analysts caution that while Wednesday’s surge is encouraging, execution risks remain high.
Market Dynamics
Technical momentum is strengthening as KSS recently reclaimed its 200-day moving average, and its Relative Strength (RS) Rating improved to 75, ranking it second among department store peers, just behind Dillard’s.
However, with over 30% of its shares shorted, Kohl’s has also been vulnerable to speculative swings tied to meme-stock activity, which could add volatility in the near term.
The Bottom Line
Kohl’s delivered a rare bright spot for investors this quarter, sparking hopes that the company’s turnaround strategy is beginning to take hold.
But with consumer spending under pressure and structural issues still looming, sustaining this momentum will be the real test in the months ahead.
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