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Kohl's shares jump 8 percent as sales, earnings top expectations

Kohls Shopper
Dina Rudick | The Boston Globe | Getty Images

Kohl's shares shot 8 percent higher in premarket trading Thursday, after the low-price department store reported sales and earnings results that topped Wall Street's expectations.

During the third quarter, Kohl's recorded revenue of $4.327 billion, a touch above the Thomson Reuters estimate of $4.325 billion. Yet that number was down 2.3 percent from the prior-year period, as the department store players continue to get squeezed by competition and price deflation.

Kohl's adjusted earnings per share came in at 80 cents, easily topping expectations for 70 cents. A year ago, it earned 75 cents a share.

Kohl's also reaffirmed its full-year earnings-per-share guidance of $3.80 to $4, excluding items such as store closings.

"We are pleased to see continued improvement in our sales trends," CEO Kevin Mansell said in a statement. "Our back-to-school season was strong, followed by a soft September, and progressive improvement throughout October. We are encouraged by these trends as we enter the holiday season."

The CEO added that Kohl's did an "excellent job managing inventory" and controlling expenses.

Kohl's comparable sales decreased 1.7 percent during the quarter, matching Thomson Reuters estimates.

"The general direction of the company looks reasonable as it approaches the critical holiday trading period," said Hakon Helgesen, a retail analyst at the Conlumino research firm. "Sales trends improved through October and inventory levels look relatively clean. Kohl's is also up against some softer comparatives in its final quarter, which should help to lift year-over-year performance."

The company's results come as the major department stores are losing sales to off-price retailers, online-only players and experiences. Investors had also been concerned that a long stretch of warm weather would dampen shoppers' appetite for fall apparel.

Macy's is scheduled to report earnings Thursday morning.