Kohl’s second-quarter results showed improved earnings, but an industry analyst says it was not enough.

Across the first half, net sales declined 4.6 per cent to $6.4 billion, while comparable sales slipped 4 per cent.

Adjusted net income was $50 million, compared with $39 million in the prior year. Gross margin improved slightly to 39.9 per cent, and selling, general, and administrative expenses fell 4.7 per cent to $2.4 billion.

Retail analyst Neil Saunders, MD at GlobalData, said the results remain unconvincing, noting that sales declines are out of step with overall consumer spending trends.

“Kohl’s core customers increased their spending by 3.7 per cent during the period, but they are not giving that growth to Kohl’s,” he said.

He added that much of the profit growth was “an illusion” created by the settlement gain. 

“Words are cheap. Until they’re backed up by action, they count for very little, and Kohl’s will not see a turnaround, let alone a revival.”

For the 13 weeks ending August 2, net sales fell 5.1 per cent year-over-year to $3.3 billion, with comparable sales down 4.2 per cent. 

Operating income rose to $279 million from $166 million last year, helped in part by a $129 million legal settlement from a credit card interchange fee lawsuit. Net income reached $139 million, compared with $39 million a year earlier.

Interim CEO Michael Bender maintained that the company’s initiatives this year are showing early progress.

“This resulted in sales performance that came in ahead of our expectations,” he said, adding that the company expanded gross margins, reduced inventory, and lowered expenses during the quarter.

Looking ahead, the company expects full-year sales to fall 5 to 6 per cent on a total basis and 4 to 5 per cent on a comparable basis.

The company is also continuing its search for a permanent CEO, which Saunders said will be critical for longer-term stability.