Discount fashion chain Kohl’s swung to a net income despite lower net sales, which an analyst attributes to more discipline in inventory management and purchasing.

The company booked a net income of $317 million, an improvement from last year’s net loss of $19 million. Revenue fell 3.4 per cent to $17.48 billion as sales fell by 3.4 per cent to $16.59 billion.

While GlobalData MD Neil Saunders praised Kohl’s for the improvement, he said the company’s continued decline in sales remains a major concern.

“Some of this is the result of more constrained consumers pulling back and buying fewer items – a trend that has hit Kohl’s shoppers harder than those of many other department stores – but this is only part of the picture,” Saunders said.

“From our data it is evident that Kohl’s customers are shopping around more widely and diverting some of their spend to other chains like Target and TJX. This trend has been in play for a while and shows no real sign that it is reversing.”

Moving forward, Kohl’s says it has partnered with Babies R Us brand owner WHP Global to expand the department store’s baby products offering.

The two companies plan to roll out about 200 Babies R Us stores-in-stores in the fall of this year, with the first shops to open this August.

“We see significant opportunity in the baby gear category and partnering with Babies R Us is another example of how we are finding new ways to optimize our assortment and further establish Kohl’s as the go-to brand for families,” said Kohl’s CEO Tom Kingsbury.

However, Saunders is pessimistic that such initiatives are enough to result in remarkable financial results.

“We think the current plans can help to stem the tide of decline in the year ahead, but they are unlikely to produce stellar growth,” Saunders said.

For this year, Kohl’s forecasts net sales to decline or increase by up to 1 per cent.