Consumers have started pulling back their spending — and some retailers are feeling the brunt of it.
Kohl's (KSS) earnings beat in the second quarter, but profits were down 53% compared to a year ago.
Adjusted earnings per share came in at $0.52, above analyst estimates of $0.23 for Q2, according to Bloomberg data. Earnings per share were $1.11 in the same time period a year ago.
Same-store sales decreased 5.0%. That's lower than analysts' estimates for a 4.62% decline. Net sales fell 4.8% to $3.68 billion, slightly lower than estimates for $3.71 billion.
Kohl's Sephora business continued to prove strong though. CEO Tim Kingsbury, who took the helm back in February, said Kohl's "maintained strong sales momentum in Sephora at Kohl’s. ... Further, solid cash flow generation allowed us to reduce our borrowings in the period."
Inventory also declined 14% compared to a year ago but was short of analyst estimates.
Following the results, Kohl's stock fluctuated in premarket trading and was up 2%.
The earnings rundown:
Here are Kohl's Q2 results versus estimates, according to Bloomberg data:
Net sales: $3.68 billion versus $3.71 billion expected
Adjusted EPS: $0.52 versus $0.23 expected
Same-store sales: -5% versus -4.62% expected
Gross margin: 39% versus 38.6% expected
Adjusted net income: 58% versus 27.26%
Inventories: -14%
What else we're watching: Reiterated 2023 financial outlook
For the full year 2023, Kohl's expects a net sales decline of between 2% and 4%. Operating margin is expected to come in at 4% while adjusted earnings per share are expected to be in the range of $2.10 to $2.70.
"Many of our strategic efforts are just underway, which we expect will contribute incrementally in the back half of the year, and even more so in 2024 and beyond," CEO Tim Kingsbury said in the release, adding that the team is "confident in our longer-term opportunity."
The company is expected to share more on its earnings conference call with investors at 9 a.m. ET on Wednesday.
What analysts were saying pre-earnings:
"Kohl's is losing customers. ... This year, the percentage of people who stopped shopping at Kohl's was 700 bps greater than the percentage who started shopping there, broadly consistent with results in previous surveys." -Jay Sole, UBS
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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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