Kohl’s Advances as CEO Michelle Gass Signals That Sales Are Picking Up

(Bloomberg) -- Kohl’s Corp. shares fell on Tuesday after posting second-quarter sales that fell short of expectations, reversing their rise in early trading.

• Same-store sales fell 2.9% for the full quarter, missing analysts’ projections, according to Consensus Metrix. Chief Executive Officer Michelle Gass said comparable sales gained ground in the latter part of the second quarter, however, and that store traffic is on the rise, thanks to its partnership with Amazon.com Inc.

Key Insights

• Investors have been broadly pessimistic about department stores as consumer preferences change and shoppers migrate online. While the Kohl’s partnership with Amazon is a unique approach to this challenge, the share decline shows Wall Street may need more evidence.
• “Given that this is now the third consecutive quarter in which revenues have fallen and the second in which comparable sales have dipped, there can be no doubt that Kohl’s has been blown off course,” said Neil Saunders, Managing Director of GlobalData Retail. Still, it’s not all doom-and-gloom. “In our view, Kohl’s does not share the desperation of other department stores and has several things working in its favor,” Saunders said.
• Kohl’s started accepting Amazon returns at all of its stores in July, and Gass said Tuesday she’s “highly encouraged” by the initial results. The program will contribute positively to operating income this year, she said.

Market Reaction

• The shares fell as much as 2.3% on Tuesday. Kohl’s stock had slid 27% this year through Monday’s close.

Get More

• For more on the results, click here.
• For the company statement, click here.

To contact the reporters on this story: Olivia Rockeman in New York at orockeman1@bloomberg.net;Jordyn Holman in New York at jholman19@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Jonathan Roeder, Lisa Wolfson

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