Kohl's Corporation ( NYSE: KSS ) soared in Tuesday afternoon trading after announcing preliminary Q3 earnings that were ahead of the consensus marks.
The department store operator expects to report a same-store sales drop of 6.9% for Q3 and EPS mark of $0.82 vs. $0.63 consensus.
The better-than-feared guidance took the sting off the announcement that highly-regarded CEO Michelle Gass is stepping down as both CEO and member of the Kohl's board to become president of Levi Strauss ( LEVI ). The board appointed Tom Kingsbury to serve as interim CEO of Khol’s from December 2 until a permanent successor is chosen.
Bank of America analyst Lorraine Hutchinson said her firm views Kingsbury as one of the best operational executives across retail.
"We think that Gass’s legacy will be the addition of Sephora shops inside Kohl’s. Recent challenges with the women’s business and inventory have plagued the stock, and we think that Kingsbury’s operational expertise and retail experience will be a welcome addition to the executive team."
Gordon Haskett analyst Chuck Grom observed that the Street has been fond of Kingsbury, particularly during his tenure at Burlington when he helped transition the company from a department store model to more of an off-price vehicle. Due to his age, Grom and team do not think Kingbsury will stay at the helm for a long time.
For his part, Kingbsury said that despite a challenging economic environment, Kohl's ( KSS ) is well positioned for long-term success due to the unique off-mall store footprint, omnichannel presence, and loyal customer base.
Shares of Kohl's ( KSS ) rose 9.76% in afternoon action on Tuesday. The Kohl's guidance was good enough to lift sentiment across the department store sector with Nordstrom ( JWN ) +4.77% , Dillard's ( DDS ) +3.90% , and Macy's ( M ) +2.45% all higher.
See how the Seeking Alpha Quant Ratings shake out for the four department store stocks.
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Kohl's and department store peers rally after better-than-feared guidance update