Shares of Kohl’s Corp. climbed on Thursday as the Menomonee Falls, Wisc.-based retailer reported earnings per share in the second quarter of 77 a share, a 17 percent increase over 66 cents a share in last year’s quarter and beating Wall Street estimates of 66 cents a share. Kohl’s stock rose more than 16 percent to $44.19 in early trading, retreating 0.09 cents or 0.20 percent to $44.10, after hours on the New York Stock Exchange.

Sales declined 1.8 percent to $4.18 billion, versus an increase of 0.1 percent to $4.27 billion in 2015’s second quarter.

Net income in the quarter ended July 30 rose 7.7 percent to $140 million from $130 million in last year’s second quarter. Same-store sales declined 1.8 percent.

Kohl’s chairman and chief executive officer Kevin Mansell said the retailer made progress in inventory management, reducing inventory per store by 6 percent. He said Kohl’s was also successful in managing expenses “in a tougher sales environment.” Selling, general and administrative expenses declined 2 percent in the second quarter to $986 million from $1 billion in the 2015 quarter.

The company updated full-year earnings-per-share guidance to $3.12 to $3.32 per diluted share. Excluding impairments, store closings and other costs, full year EPS is expected to be $3.80 to $4, compared to the retailer’s prior guidance of $4.05 to $4.25.

Transactions were down 4.8 percent in the quarter; but the average transaction size increased 300 basis points. Men’s, including the relaunched Sonoma brand, was the strongest category and home was the weakest. Business was strongest in the Southeast, Midwest, and West, while the Northeast and mid-Atlantic region performed below the company average.

Kohl’s incurred $129 million in expenses related to store closures, lease terminations, IT costs and severance, including $119 million in costs for future store closures. Mansell said he doesn’t foresee closing any stores during the third quarter.

Updating Kohl’s progress on the Greatness Agenda’s key initiatives, Mansell said the retailer is making progress in shortening the production cycle by 40 percent for women’s apparel and 25 percent for other categories. “One big initiative we need to take with our private and exclusive brands is improve our speed to market,” he said.

Kohl’s during the second quarter launched Stride-Rite children’s shoes and relaunched New Balance in the active area, achieving a 9 percent comp-store sales increase in the quarter.

National brands’ sales rose in low-single digits. “Nike continues to be very strong,” Mansell said, adding that the brand saw increases in the low double-digits in terms of comp-store sales. “Active and wellness now accounts for 18 percent of total sales. National brand penetration is 18 percent.

“We’re excited to add Under Armour in 2017,” Mansell added, noting that the brand will be offered in men’s women’s and health and wellness. “We have a strong leadership in activewear and wellness. Adding one of most sought-after brands [in the category] will allow us to project that more strongly. Adding Under Armour will accelerate our rate of growth and attract a new customer.”

Kohl’s at the end of the second quarter operated 1,150 stores, down from 1,164 a year ago. Two Fila outlets opened during the quarter. The retailer opened two Off Aisle stores in March.

“We’ll open six smaller-format stores in the third quarter, adding to the two we opened in first quarter,” Mansell said. “We’ve seen [good] results from the flexibility and localized offerings. In 2017, we’ll look for a small number of these smaller stores to open in more populated markets to possibly use as a tool to trade in areas where our [traditional stores] are too big.”

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