Kohl's says it has finally found its footing — bosses are crediting promotions, brand-name products, and back-to-school shoppers for the turnaround.
The Wisconsin-based retailer with 1,153 US stores more than doubled its net incometo $153 million last quarter, sending its stock up 20 percent on Wednesday.
The win is sorely needed.In May, the company ousted its CEO after just 100 days, amid lower sales and a series of store closures.
Kohl's - best known for racks of affordable clothes, shoes, and home goods - credits a focus on value and brand consistency, a similar playbook that has also boosted a handful of other legendary chains this earnings season.
The company'sinterim CEO, Michael Bender, said the chain is addressing past mistakes by reintroducing its petite section, revamping jewelry merchandising, focusing on lower-priced and exclusive brand partnerships, and expanding its use of coupons.
'As we reestablished the petites category in all stores, this business accelerated, up almost 40 percent in the second quarter,' Bender said.
Sales in rebooted jewelry grew by 12 percent, and Sephora's pop-ups had a three percent increase.
But independent experts told the Daily Mail that they're skeptical about Kohl's turnaround.
Kohl's said it is reeling in customers with promotions and better products - analysts say there are underlying problems
'Their management has put an optimistic spin on their numbers,' Neil Saunders, a retail analyst at GlobalData, said.
The chain's stock has been on a roller coaster. In July, shares jumped 105 percent after Reddit-inspired retail investors poured money into the brand, similar to the 2021 meme stock craze that sent the stock prices of ailing businesses skyrocketing.
But beneath the surface, Kohl's also reported a5.1 percent decline in total sales, along with a$129 million cash boost from a one-time lawsuit payment.
Without that, Saunders says, the company's income would have been 63 percent in the red.
'On the ground, most stores look messy and are completely devoid of inspiration. Kohl’s is still losing customers and market share as a result,' he said.
'There is nothing optimistic about a continued sales decline that is way worse than most retail peers are delivering.'
Still, Kohl's executives are leaning hard on a back-to-basics playbook — the same formula other retailers have used to steady the ship.
'We really think we're set up well,' the company's CFO, Jill Timm, said while reporting the second straight quarter of better-than-expected sales.
Kohl's has had major celebrity endorsements, likeEllie Kemper, the star actress from Unbreakable Kimmy Schmidt
Independent analysts described Kohl's stores as 'mess' and 'completely devoid of inspiration'
Still, the stock has had a huge rise - it is also benefitting from a Reddit thread that is trying to hurt short positions in the company
Neil Saunders told the Daily Mail that the company's underlying numbers are still worrying
'As we're bringing product lines back, we're seeing we're gaining that trip back from the customer.'
They also highlighted successful partnerships with Levi's Jeans, Nine West, and Nike on the earnings call.
Bender also said stores are selling out of fleece outerwear, backpacks, and trendy jeans.
The company's CFO, Jill Timm, praised the return of jewelry and Kohl's petite sections
'Anything baggy, wide leg, those types of features in denim are showing strength,' he said.
But Saunders said growth was easy for a chain that has been hemorrhaging customers for several quarters.
'The outlook for the balance of the year is not as bad as feared, but that does not mean it is good,' he said.
Still, the back-to-basics strategy mirrors many of the winners in this earnings season. Retailers that stuck to their core identity and lured shoppers with discounts have logged some of the strongest results and Wall Street reactions.
Chili's, the 1,200-unit Tex-Mex chain, notched a 24 percent sales bump after splashing promotions across TikTok. McDonald's posted banner results by cutting prices.
Same for Campbell's Soup, Amazon, Hershey's, Dollar General, and Apple, which all saw major boosts on their lower-cost products.
The opposite has been true for brands that strayed too far from what made them successful.
Cracker Barrel, for instance, has faced days of blowback after rolling out new logos and ditching its rustic in-store design — a gamble that left many longtime customers cold.
Target has also continued its downturn after offending conservative customers with Pride collections and liberal customers for walking away from DEI promises.
