Kohl's has lowered its full-year sales forecast as it grapples with the fallout from a larger-than-anticipated annual decline in fiscal second-quarter revenue. However, the retail giant has effectively upgraded its earnings expectations for the year, indicating a degree of resilience despite the difficulties faced in the current macroeconomic climate.
The department store chain has revised its sales guidance, now predicting a 4% to 6% decline on a year-over-year basis from last year's sales total of $16.59 billion. This revision marks a considerable shift from their earlier forecast, which anticipated a smaller decrease of 2% to 4% back in May. Analysts surveyed by Capital IQ have adjusted their expectations, projecting Kohl's will generate approximately $16.18 billion in revenue for this fiscal year.
In terms of earnings, the company has raised its earnings per share (EPS) target to a range of $1.75 to $2.25, significantly up from the previous guidance of $1.25 to $1.85. This optimistic outlook contrasts with the market consensus, which suggests an EPS of $1.51 for the current fiscal year. "Our outlook for the balance of the year assumes the macroeconomic environment will remain challenging," said Chief Executive Tom Kingsbury during a conference call, as reported in a transcript from Capital IQ.
In terms of financial performance for the second quarter, Kohl's reported revenue of $3.53 billion, down from $3.68 billion in the previous year. This figure fell short of analysts' expectations, which averaged $3.65 billion according to Capital IQ. However, Kohl's was able to report an increase in EPS, which rose to $0.59 for the three-month period ending August 3, compared to $0.52 a year earlier, surpassing the market prediction of $0.44.
An analysis of comparable sales reveals a decline of 5.1% during the quarter, yet there was an uptick in overall transactions, as Kingsbury pointed out. He elaborated on consumer behavior, stating, "Our customers exhibited more discretion in their spending, which pressured overall sales and overshadowed strong performance in our key growth areas, including Sephora, home decor, gifting, and impulse items.".