It looks like Kohl’s (KSS) has finally shaken off its long retail funk.
The retailer said on Monday that comparable sales rose 6.9% during the November-December holiday period and raised its full year profit forecast as a result. With that performance, Kohl’s handily bested the overall retail industry’s 4.9% gain as estimated by MasterCard during its busiest time of the year; it also outperformed rivals like Macy’s (M) and J.C. Penney (JCP), which also saw growth.
The news sent shares soaring nearly 8% in premarket trading, continuing a big turnaround in recent months for the stock.
Perhaps most crucially, Kohl’s seems to have licked, at least for now, a problem bedeviling it for some years: getting customers to come to its stores. Kohl’s CEO Kevin Mansell has previously told Coins2Day that the chain’s No. 1 priority would be to take steps to drum up store traffic even as it has invested heavily in its e-commerce in large part to better integrate both avenues. Unlike Penney or Macy’s, Kohl’s only has a small fraction of stores in shopping malls, which has helped it.
To achieve that, Kohl’s has tried out risky moves such as handling returns for Amazon.com (AMZN) at a few dozen stores in a test. It’s also shrinking hundreds of stores rather than close them, avoiding the fleet reduction that has rocked some rivals. In addition, Kohl’s has brought in brands like Under Armour (UAA) and is overhauling some of its store brands.
On the strength of its holiday season, Kohl’s also raised its full-year profit outlook and now expects fiscal 2017 adjusted earnings to be between $3.98 to $4.08, compared with a prior range of $3.60 to $3.80. That is largely above the $3.64 Wall Street analysts were projecting, according to a poll by Thomson Reuters. Kohl’s will report full quarterly results on March 1.
In its most recent quarter, Kohl’s comparable sales rose a scant 0.1%, but at least it was growth. Indeed, Kohl’s total revenues are roughly were they were six years ago. The holiday figures suggest Kohl’s is winning market share back from rivals and that its strategy is taking hold. For the Christmas period, that included Kohl’s Cash program, a fixture of its marketing and loyalty efforts for years, playing a bigger role in its marketing.