American department store chain Kohl's Corporation has reported a net sales decline of 4.7 per cent year-over-year (YoY) for the first half of fiscal 2024 (H1 FY24), bringing total sales down to $6.7 billion. Comparable sales also saw a reduction of 4.8 per cent. Despite this, the company managed to increase its gross margin as a percentage of net sales to 39.6 per cent, an improvement of 54 basis points compared to the same period last year.

Operating income for the first half of the fiscal year came in at $209 million, down from $261 million in the prior year. This represented 2.9 per cent of total revenue, a decrease of 56 basis points YoY. Net income also experienced a significant drop, with the company reporting $39 million, or $0.35 per diluted share, compared to $72 million, or $0.65 per diluted share, in the previous year, the company said in a press release.

Selling, general, and administrative expenses saw a reduction of 2.5 per cent YoY, totalling $2.5 billion. However, as a percentage of total revenue, selling, general, and administrative expenses increased by 78 basis points, reaching 34.8 per cent.

The second quarter net sales decreased by 4.2 per cent YoY to $3.5 billion, with comparable sales down 5.1 per cent.

The gross margin for the quarter improved to 39.6 per cent, an increase of 59 basis points compared to the same period last year. Selling, general, and administrative expenses matched the decline in net sales, falling by 4.2 per cent to $1.2 billion. As a percentage of total revenue, selling, general, and administrative expenses slightly decreased by 1 basis point, standing at 33.5 per cent.

Operating income for the quarter was $166 million, a slight increase from $163 million in the prior year. This translated to 4.4 per cent of total revenue, an improvement of 26 basis points YoY. Net income also saw growth, with the company reporting $66 million, or $0.59 per diluted share, compared to $58 million, or $0.52 per diluted share, in the previous year.

The company also managed to reduce its inventory by 9 per cent YoY, ending the quarter with $3.2 billion in inventory.

“We have taken significant action to reposition Kohl’s for future growth. However, our efforts have yet to fully yield the intended outcome due in part to a continued challenging consumer environment and softness in our core business. During the second quarter, our customers exhibited more discretion in their spending, which pressured our sales even as customers transacted more frequently,” said Tom Kingsbury, Kohl’s chief executive officer.

Fibre2Fashion News Desk (DP)