Kohl’s quarterly profit beat lifts shares even as sales dip

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(Reuters) – Department store operator Kohl’s Corp <KSS.N> reported better-than-expected quarterly profit and revenue on Tuesday and said it expects to benefit from newer partnerships and the expansion of its Amazon returns program in the second half of the year.

Kohl’s shares, which are down 27% so far this year, underperforming the S&P 500 index, were up nearly 6% in premarket trade.

Kohl’s has been investing in several new partnerships to woo more shoppers. Last month, it expanded a returns program it launched with Amazon in 2017, through which items bought on the e-commerce website could be returned at Kohl’s stores, generating additional sales for the retailer. Kohl’s also stocks Amazon’s Echo Dot speakers and Kindle e-readers at its stores.

The retailer has also teamed up with millennial-focused Popsugar to launch a new line of clothes and announced last week it would sell a selection of emerging brands online and in more than 50 stores, with Facebook helping it to identify trendy brands.

Sales at stores open for at least a year fell 2.90% in the second quarter. Analysts on average were expecting a drop of 2.50%, according IBES data from Refinitiv.

However, the company said that its comparable sales turned positive during the last six weeks of the second quarter with 1% growth.

“This positive trend has continued into August driven by a successful start to the back-to-school season. We are confident that our upcoming brand launches, program expansions, and increased traffic from the Amazon returns program will incrementally contribute to our performance,” Chief Executive Officer Michelle Gass said.

Net income fell to $241 million, or $1.51 per share, in the quarter ended Aug. 3 from $292 million, or $1.76 per share, a year earlier.

Excluding certain items, the company earned $1.55 per share, beating analysts expectation of $1.53.

Net sales fell to $4.17 billion from $4.31 billion a year earlier missing expectations of $4.20 billion.

Kohl’s also maintained its fiscal 2019 adjusted profit forecast of a $5.15-$5.45 per share range.

(Reporting by Aishwarya Venugopal in Bengaluru; Editing by Tomasz Janowski)