Kohl's (KSS) stock was higher in pre-market trading after a strong fourth quarter report Tuesday morning.
The bump in share price for the Wisconsin-based retailer comes after reporting that earnings per share for the three months ended February 2 came in at $2.24, $0.06 ahead of the Street consensus forecast, and revenue bested the analyst forecast by about $140 million.
CEO Michelle Gass said that the strong holiday season was a major driver of the earnings beat, alleviating some concern that was raised on the retail chain after the release of Department of Commerce retail statistics in mid-February.
"The positive momentum we've had all year continued as we achieved a 1 percent comp sales increase for the fourth quarter, resulting in a 1.7 percent increase for the year," said Gass. "Building on the exceptional holiday we had in 2017, we've now achieved a 7 percent increase in the fourth quarter on a two-year basis."
Adding to that, the company reported that it will repurchase between $400 million and $500 million in company stock, adding to shareholder protection provided by the nearly a 10% dividend raise approved by the company's Board on February 27.Sustaining Shoppers
One of the key metrics for both Kohl's, and its fellow retail pre-market runner Target (TGT) , was the sustenance of same store sales.
While Kohl's same store sales number was certainly not as impressive as Target's 5.3% jump, the bar was much higher for Kohl's. In the prior year's quarter same store sales leapt 6.3% at Kohl's, while Targets gained "only" 3.6%.
The company is looking to again increase comparable sales by 2% in 2019, picking up more momentum as it right sizes its business to maintain engagement.
The company will close four underperforming stores in April, but will open four new smaller format stores later in the year to replace them, according to an operational update.
The smaller format for stores coincides with plans to lease space in larger stores to grocery chains that will look to accelerate foot traffic into its locations.Promotion Payoff
One of the key aspects of Kohl's competitiveness is its heavy promotional strategy, through Kohl's Cash as well as a high-profile partnership with Amazon (AMZN) to accept returns for the e-commerce giant.
The promotion heavy strategy has not cut into the company's margins, which remained largely in line with consensus. The maintenance of margins has helped the company focus on debt draw-down as well.
Management highlighted actions to lessen the company's debt load in the past year, which included paying down $900 million in debt in its full fiscal year.
The debt to EBITDA ratio for the company now stands at about half the department store peer average, according to JP Morgan estimates.
More details on how the company is pursuing promotions while maintaining profitability and expanding its relationship with the Bezos-led behemoth are hotly anticipated in the company's earnings conference call scheduled for 9 a.m. ET.
To listen along as the call commences, click here.