Kohl's reported a higher-than-expected quarterly profit, helped by better inventory management and warm weather that boosted sales of summer clothes and accessories.
The department store chain's shares rose 9 percent to $41.50 in premarket trading on Thursday. Shares of rival Macy's Inc , which also reports quarterly results on Thursday, were up 4.4 percent.
Shares of department store operators, which are struggling with stiff competition from online and off-price retailers, have been under pressure in the past year.
The upbeat results follow a disastrous first quarter, when Kohl's sales fell for the first time in six quarters.
The store chain, which largely caters to low- to middle-income customers, has been cutting costs by closing underperforming stores this year. It is also focusing on inventory reduction and speeding up lead times for getting merchandise to stores.
The warm weather in the quarter also helped, boosting traffic in malls and helping department stores clear inventory from the previous quarter.
The company said on Thursday its inventory management initiatives helped boost gross margins to 39.5 percent from 38.9 percent in the second quarter ended July 30.
Kohl's ended the quarter with significantly lower inventory per store compared with last year.
Sales at Kohl's stores open at least a year fell 1.8 percent, down for the second straight quarter. Analysts polled by research firm Consensus Metrix had on average forecast a 1.7 percent drop.
Kohl's net income rose 7.7 percent to $140 million, or 77 cents per share, in the quarter, from $130 million, or 66 cents per share, a year earlier.
Excluding items, the company earned $1.22 per share.
Net sales fell 2 percent to $4.18 billion.
Analysts on average had expected earnings of $1.03 per share and revenue of $4.16 billion, according to Thomson Reuters I/B/E/S.
The company said it now expects adjusted earnings of 3.80-$4.00 per share for the year ending January 2017, down from its previous forecast of $4.05 to $4.25.