Mother Nature wasn't able to completely derail Kohl's (KSS) progress at turning around its business.
Shares of the mid-tier department store surged as much as 7% in premarket trading on Thursday as third-quarter earnings came in at 80 cents a share, handily surpassing analysts' estimates of 70 cents. Sales fell 2.3% from the prior year to $4.3 billion, in line with Wall Street forecasts.
Here are several things investors may be cheering with Kohl's in the early going Thursday.
1. Same-Store Sales Didn't Fall Off a Cliff
Kohl's quarter was indeed setup to let down investors due in large part to warmer-than-expected weather. "We believe warm weather in September and October dampened demand for fall seasonal items at Kohl's. The company is the most
weather sensitive name we cover, since it is a key item business and customers tend to buy closer to need on average," wrote Jefferies analyst Dan Binder ahead of the results.
But Kohl's sales didn't completely miss the mark, with same-store sales falling 1.7% compared to estimates for a 1.4% drop. The result may spur hope the Kohl's shopper is in a good mindset ahead of the holiday shopping season.
2. Inventory Is in Good Shape
Despite the warmth that caused consumers to delay winter apparel purchases, Kohl's isn't flooded with inventory headed into the holidays. Inventory fell 10.1% from the prior year to $4.7 billion. That should leave Kohl's in good shape to show consumers its new full-price products during the holiday season.
3. Outlook Reaffirmed
Kohl's reiterated its full-year earnings outlook of $3.80 to $4 a share, suggesting the company hasn't seen material sales weakness in the lead up to the U.S. presidential election.