Shoppers look at items displayed at a Kohl's store at the Newport Centre mall on Sunday, December 15, 2024 in Jersey City. N.J.
Kohl's Corp. shares surged after it offered a more optimistic full-year sales outlook, the latest indication that consumer spending hasn't yet run out of steam.
The company now expects comparable sales to fall no more than 5% this year, an improvement from its prior forecast that sales would decline as much as 6%. The company also reported second-quarter sales that were better than Wall Street estimates.
Retailers continue to point to sales momentum from U.S. shoppers shrugging off worries about tariffs and inflation. Earlier this month, TJ Maxx owner TJX Cos. and Ross Stores Inc. indicated that Americans are willing to spend but are looking for cheaper options.
Abercrombie & Fitch Co. also upped its sales forecast on strong back-to-school demand. Foot Locker Inc., which is being acquired by Dick's Sporting Goods Inc., reported a 1.4% gain in North America comparable sales in the most recent quarter. The footwear chain's European and Asia Pacific businesses, meanwhile, saw a 10% drop in sales.
The momentum cuts against signs that Americans continue to worry about the economy. A measure of consumer confidence fell in August on growing concerns about the job market. Unemployment and limited salary increases are contributing to consumer sentiment hovering at levels well below those seen prior to the pandemic.
Kohl's latest results suggest that recent moves, such as focusing on fine jewelry and improving its womenswear selection, are helping win back consumers. The company has looked to tie-ups with partners such as Sephora and the Babies "R" Us brand to help drive spending and shopper traffic.
The chain's "initiatives are beginning to resonate with our customers," Michael Bender, Kohl's interim chief executive officer, said in a statement.
Shares of the Menomonee Falls, Wis.-based company rose 24% by close of New York trading Wednesday.
Kohl's is looking to reverse 14 straight quarters of declining revenue amid intense competition for retail dollars and upheaval in its corporate ranks. Kohl's is looking for a new CEO after firing the previous CEO for directing millions of dollars to a romantic partner. Prior to that move, the retailer cut 10% of corporate jobs.
Bloomberg News reported on Tuesday that Kohl's has asked some vendors for more time to settle invoices. Retailers will typically seek longer payment terms to manage working capital swings and conserve cash.
Bender took over when the retailer announced the termination of CEO Ashley Buchanan on May 1.
According to a company filing, Buchanan directed Kohl's to conduct business with a vendor founded by someone with whom he has had a relationship -- the nature of which was romantic, Bloomberg previously reported. He caused the retailer to enter a multimillion-dollar consulting agreement where "the same individual was a part of the consulting team," the filing said.
Kohl's has more than $2 billion of debt, including the recent issuance of $360 million of junk bonds in which proceeds were earmarked to meet obligations coming due this year.
Information for this article was contributed by Charles Gorrivan of Bloomberg (WPNS).