Kohl’s (KSS) shares rose as much as 7 percent in early trading after the company beat Wall Street earnings expectations by 15 cents and raised its earnings forecast.

In the second quarter, the company doubled its inventory holdings and spending, resulting in a 9% year-over-year decline in inventory. The company plans to “remain committed to increasing inventory turns and maintaining inventory levels in the mid-single digits,” CEO Tom Kingsbury said on a conference call with investors.

All this in an effort to “be competitive during a holiday season with many special offers,” said CFO Jill Timm.

The company expects to end 2024 with an operating margin between 3.4% and 3.8% and adjusted earnings per share in the range of $1.75 to $2.25.

The company has lowered its full-year sales growth forecast as the “difficult consumer environment” continues and Kohl’s customers feel the “burden” of higher living costs, causing them to put less in their shopping baskets in the second quarter.

The company now expects like-for-like sales to decline by three to five percent. This is a larger decline than the previously expected year-on-year decline of one to three percent.

Sephora at Kohl’s continues to be a bright spot for the brand, with the company’s total sales increasing nearly 45% year over year in the second quarter, with revenue growth in the low double digits.

In 2024, a total of 140 locations were added, exceeding the number of 1,000 stores.

“We’ve noticed a nice overlap in the customers who shop at Sephora,” Kingsbury said. “About 35% of Sephora shoppers have another Kohl’s product in their cart.” As the beauty store attracts younger customers, he plans to move the juniors’ section to the front of the store.