Kohl’s shares spike as retailer reports a surprise profit

Kohl’s shares spiked early Wednesday as the struggling retailer posted a surprise profit while it chases a turnaround.

Shares jumped about 12% in premarket trading.

The retailer reiterated its full-year outlook. It said it expects net sales to range between a decline of 2% and a decline of 4%, including the approximately 1% impact from having one more week of sales this year. It said it expects diluted earnings per share to range from $2.10 to $2.70, excluding nonrecurring charges.

Here’s how the retailer did for the quarter that ended April 29 compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:

Earnings per share: 13 cents vs. a loss of 42 cents, expectedRevenue: $3.36 billion vs. $3.34 billion

Kohl’s has fallen short on sales and disappointed investors in recent quarters, as it tries to reinvent itself and woo middle-income shoppers squeezed by inflation.The retailer became a target for activist investors, including Ancora Holdings and Macellum Capital, which pushed the company to oust its then-CEO Michelle Gass and shake up its board. Kohl’s also discussed and then ended a bid last year to sell its business to Vitamin Shoppe owner Franchise Group.

Since then, Kohl’s has tapped a new CEO: Tom Kingsbury, the former chief executive of off-price retailer Burlington Stores. Gass, its former CEO, left to become the next leader of Levi Strauss.

Kingsbury described the first quarter as “a first step” to turn around the company’s sales. He said in a news release that the company has reduced excess inventory, attracted customers with Sephora shops and made its stores more productive.

In the fiscal first quarter, Kohl’s reported a net income of $14 million, or 13 cents per share, compared with $14 million, or 11 cents per year, a year earlier.

Net sales fell to $3.36 billion from $3.47 billion in the year-ago period.

Shares of Kohl’s closed Tuesday at $19.27. That’s less than half of its 52-high, which was $47.63. The company’s stock has tumbled nearly 23% so far this year — even as the S&P 500 has risen about 8% and the retail-focused XRT has fallen nearly 2%.

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