Shoppers enter the Kohl's store in South Burlington, Vt., on . Kohl's Corp.'s fourth-quarter net income increased 14 percent as merchandise profit margins improved through exclusive brand offerings and tight inventory managementEarns Kohls, South Burlington, USA

Michelle Gass hit the ground running as chief executive officer of Kohl’s Corp., logging better first-quarter sales and profits, naming Doug Howe chief merchant and expanding the retailer’s push into active.

But Gass also felt the sting of the market — one of the big downsides of the corner office, which she recently took over from Kevin Mansell.

Investors were initially heartened by the firm’s 3.6 percent first-quarter gain in comparable sales, but shares retreated as it became clear most of that improvement came from a shift in the timing of a friends and family promotional event.

Kohl’s stock dropped 7.5 percent to $60.59 on Tuesday.

Otherwise the first-quarter report was encouraging and Gass told analysts on a conference call that it amounted to “a strong start to 2018.”

Net profits rose to $75 million, or 45 cents a diluted share, from $66 million, or 39 cents, a year earlier. Revenues for the three months ended May 5 increased to $4.21 billion from $4.07 billion. The friend and family sales event accounted for about 320 basis points of the 3.6 comp sales gain.

Kohl’s also upped its earnings per share outlook for the year to a range of $5.05 to $5.50, compared with prior guidance of $4.95 to $5.45.

Gaas has been at Kohl’s for five years, first as chief customer officer and then as chief merchandising and customer officer, and has had a hand building the retailer’s strategy.

Michelle Gass Kohl's

Michelle Gass 

“I’m stepping into this role at what I believe is an incredible time for the company,” Gass said. “Our strategies are gaining traction and we have momentum.”

In taking on her old gig as head merchant, Howe brings with him 30 years of experience, most recently as global chief merchandising officer at Qurate, overseeing product at QVC and HSN. At Kohl’s, Howe reports to Gass and will oversee overall merchandise strategy and all merchandising functions.

That includes the increasingly important active business, which comped up 10 percent in the first quarter based on sales from the area’s top three brands in the category: Nike, Under Armour and Adidas.

Gass said: “As part of our efforts to invest in our active and wellness initiative in a bigger and bolder way we will launch an active expansion test in 30 stores in August. Our teams have been collaborating with all of our active brand partners for some time to create a much more dramatic elevation of product and the customer experience in those stores. This will result in an increase in square footage for the active business by approximately 40 percent and will provide customers with almost 50 percent more choices.”

At the same time, Kohl’s is continuing to “edit out” some of its underperforming proprietary names while rejiggering some of its stores.

Last year, the company sought to “align space to sales potential” in 300 of its lower-volume stores, removing more than 100 fixtures per store. This year, another 200 of the retailer’s more than 1,100 doors will be rightsized.

And the stores are also being used in new ways.

About 30 percent of the company’s web sales were fulfilled from stores, up from around 25 percent a year ago. Kohl’s also is continuing with its pilot program that enables it to accept Amazon returns.

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