Kohl’s shares climbed 24% on Wednesday after the retailer topped Wall Street’s fiscal second-quarter earnings and revenue expectations, even as its sales declined and it looks for a new CEO.

The Wisconsin-based department store narrowed its full-year sales guidance to reflect the higher part of its previous range. It said it now expects net sales to decline by between 5% and 6%. It had previously anticipated sales would fall 5% to 7%.

It also revised its full-year earnings per share guidance. Kohl’s said it expects earnings to be in the range of 50 cents to 80 cents per share adjusted. It was unclear how that compared with a previous outlook of 10 cents to 60 cents per share, which was not adjusted.

On Kohl’s earnings call, interim CEO Michael Bender attributed the department store’s slower sales to the economy. He said lower- and middle-income customers are trading down to less-expensive brands. 

Yet he also said Kohl’s is working to fix its mistakes. For example, he said, it is reintroducing the petite section, which it had phased out. It has added jewelry back to stores — a category it took away to make room for Sephora shops — and focused on carrying exclusive brands, especially ones that have lower price points. And the retailer is overhauling its discount strategy, so customers can use coupons for more of its brands.

Yet Bender stopped short of saying when Kohl’s will report sales growth again. He said all of its initiatives seek to win back customers who have stopped visiting Kohl’s or bought less there recently.

“We know that our route to long-term success for this business is to get back to growth,” he said. “And everything that we’ve talked about and everything you’ve heard from us certainly is directed at that intention.”

Shares closed on Wednesday at $16.17, up 24%. As of Wednesday’s close, shares are up about 14% so far this year, outpacing the approximately 10% gains of the S&P 500 during the same period.

Here’s how the retailer did for the three-month period that ended Aug. 2 compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

• Earnings per share: 56 cents adjusted vs. 29 cents expected
• Revenue: $3.35 billion vs. $3.32 billion expected

Kohl’s fiscal second-quarter net income was $153 million, or $1.35 per share, compared with $66 million, or 59 cents per share, in the year-ago period. Adjusting for one-time items, including the costs of store closures and gains from a legal settlement, earnings per share were 56 cents.

Net sales dropped from $3.53 billion in the year-ago quarter.

Kohl’s shares and sales have both been slumping — and the company’s leadership turmoil has tripped up its turnaround. Annual revenue has declined three years in a row. Its market value, which was just under $7 billion at the end of 2021, has fallen to roughly $1.5 billion. And the retailer has had three chief executives in as many years.

The company’s leadership changes began in late 2022 when Kohl’s CEO Michelle Gass left to become president and eventual CEO of Levi Strauss. Tom Kingsbury, a member of Kohl’s board and the former CEO of Burlington Stores, succeeded Gass. In November, Kohl’s said Kingsbury would step down after two years in the role and named Ashley Buchanan, the then-CEO of Michaels and a veteran of Walmart and Sam’s Club, as his successor.

Less than four months after he started as CEO, Kohl’s fired Buchanan after an investigation found he pushed for deals with a vendor owned by his girlfriend.

Kohl’s named Bender, a member of Kohl’s board since 2019, as its interim CEO.

There have been signs of potential financial concerns, too. Kohl’s recently changed its payment terms with vendors, a move that retailers typically make to delay payments for longer periods and conserve cash.

In a statement, Kohl’s did not specify the changes, but said the company “regularly reviews our work to ensure we are operating as effectively and efficiently as possible.” It said it notified some of its vendors about the updated payment terms in March.

Kohl’s continued to post sales declines in the second quarter. Comparable sales decreased 4.2% compared with the year-ago quarter. The industry metric takes out one-time factors like store openings and closures.

Yet Bender said the fiscal second quarter’s results reflect the company’s progress. He said the retailer reduced its inventory, lowered expenses and gained better traction with customers.

Inventory at the end of the quarter was $3 billion, a 5% drop from the previous year.

Sales trends improved throughout the quarter, he said on the company’s earnings call. It posted its weakest performance in May, improved in June and had its strongest month of the three-month period in July. He said July’s comparable sales were in line with the year-ago period.

Men’s and kid’s categories were the weakest of the quarter, as customers bought fewer spring clothing items like T-shirts and shorts. On the other hand, Kohl’s sales were stronger for dresses, kids’ footwear, home decor and its lower-priced exclusive brands.

Kohl’s is trying to find a better balance between selling national brands that customers recognize and offering merchandise that shoppers can only find at Kohl’s, Bender said. It debuted three exclusive home brands and will expand its FLX brand, an activewear line, to the kids’ category this fall at 300 stores and online. Its own brands tend to cost less, which appeals to value-driven shoppers, he said.

In the spring, Kohl’s completed the final rollout of Sephora shops to all of its stores. Bender said the beauty shops have delivered “exactly as intended” and drawn new and younger customers to Kohl’s stores.

Kohl’s has tapped two new executives to lead e-commerce, which is one of its struggling businesses, this summer. Arianne Parisi, former chief digital officer for JD Sports, is Kohl’s new chief digital officer.

It also hired Steven Dee as its new chief technology officer. Dee previously worked in technology operations for Rodan + Fields, Nike, Hayneedle and J.Crew. They will replace Siobhán McFeeney, who left the company in the spring.

Digital sales were stronger than store sales during the quarter, which Kohl’s attributed in part to adding back brands to coupon eligibility.

— CNBC’s Courtney Reagan contributed to this report.