Kohl's: mixed Q2 results, narrower revenue decline, higher guidance

Kohl's reported mixed second quarter results on Aug. 27, posting a narrower-than-expected revenue decline and improved profitability metrics even as core sales continued to fall. Net income rose to $153 million, or $1.35 per share, boosted by a $129 million one-time legal settlement, while adjusted diluted earnings per share on a non-GAAP basis were $0.56, slightly below the prior year but well above many analyst estimates. The company modestly raised its full-year profit guidance while reiterating that revenue pressures persist.

For the quarter ended Aug. 2, total revenue on a GAAP basis was $3.55 billion, down from $3.73 billion a year earlier. Net sales were $3.3 billion, a 5.1 percent decline year over year, and comparable-store sales fell 4.2 percent. Gross margin widened by 28 basis points to 39.9 percent, reflecting tighter inventory management and greater penetration of higher-margin private-label and proprietary brands. Selling, general and administrative expenses fell 4.1 percent to $1.20 billion, although lower sales meant SGA was a larger share of revenue.

Management highlighted disciplined cost control and inventory reductions as drivers of the quarter’s...