Kohl’s reported third-quarter earnings that were significantly better than Wall Street’s targets although same-store sales were down 13.3 percent.

In the quarter ended October 31, the reported loss came to $12 million, or 8 cents a share, against earnings of $123 million, or 78 cents, a year ago.

On a non-GAAP basis, earnings were $2 million, or 1 cent, down from $116 million, or 78 cents, a year earlier. Wall Street’s consensus estimate had been a 43 cents per share loss.

Revenues fell 14.0 percent to $3.98 billion from $4.63 billion. Wall Street’s consensus estimate had been $3.88 billion. Third-quarter comparable sales decreased by 13.3 percent.

Gross margins eroded 48 basis points to 35.8 percent from 36.3 percent. SG&A expenses were reduced 8.2 percent to $1.3 million from $1.42 million but increased as a percent of sales to 32.7 percent from 30.7 percent.

Kohl’s noted that third-quarter sales and earnings exceed company expectations, with significant improvement from the second quarter

The retailer also noted that it strengthened its financial position during the quarter by fully repaying the revolver and ending with $1.9 billion in cash. The company also saw strong operating cash flow year-to-date of $910 million.

“I continue to be very proud of how our organization is navigating through the COVID-19 pandemic. Our third-quarter results exceeded our expectations with significant sequential sales and profitability improvement. Digital sales growth remained strong and our actions to improve our gross margin showed great progress. We also further strengthened our financial position and fully repaid our revolver during the period, which underscores the solid cash flow generation of our business,” said Michelle Gass, Kohl’s chief executive officer.

“We entered the holiday season well-positioned and prepared to serve our customers with more omnichannel conveniences in place to deliver the great experience they always expect from Kohl’s. As we look ahead, we are incredibly focused on executing against our new strategic framework, which represents our greatest opportunity to drive long-term sales and profit growth and create shareholder value in the coming years,” said Gass. “In addition, through disciplined capital management, we plan to reinstate a dividend during the first half of 2021.”

Photo courtesy Kohl’s