Kohl’s Corporation (NYSE:KSS) distinguished its stores from rival retailers by beating profit and inventory expectations in the first quarter, ended April 29. Despite the positive surprise, KSS stock holder pushed down the shares more than 4% this morning.
Earnings per share were 39 cents compared with 31 cents in the comparable quarter last year, according to a company announcement. Wall Street analysts’ average forecast was for 29 cents. KSS sales of $3.84 billion fell short of analysts estimates of $3.9 billion, as did comparable-store sales, which decline 2.7%.
Kohl’s net income rocketed to $66 million in the first quarter from $17 million a year earlier, when it recorded a $64 million charge related to impairments and store closures. Merchandise inventories fell 2.3%, while selling and general expenses fell 3.3% in the latest quarter.
“We are encouraged by the significant improvement in sales and traffic for the March and April period, after a weak February start to the first quarter,” Kevin Mansell, Kohl’s chairman, chief executive officer and president, said in the press release. “Continued strong inventory management led to a major improvement in gross margin, and our teams managed expenses exceptionally well. I am pleased to say that combined together these efforts led to an increase in income for the period.”
Kohl’s and rivals including as Macy’s Inc (NYSE:M) and J.C. Penney Co Inc (NYSE:JCP) are trying to stay the course facing falling mall traffic and online competition by cutting costs, closing stores and keeping inventories low.
KSS stock is down more than 18% this year as of yesterday’s market close. As InvestorPlace contributor James Brumley wrote recently, “just know that it’s all part of an ongoing rout of the retail sector, as apparel retailing loses its appeal and relevancy to goods and services that can be ordered (and even delivered) digitally.”