Dive Brief:

• Kohl's on Tuesday reported that second quarter total revenue rose 4% to $4.6 billion, up from $4.4 billion a year ago. This edged past the consensus analyst estimate from Zacks by 2.80%, its fourth revenue beat in the last four quarters. Comparable sales rose 3.1% after dipping 0.4% a year ago, according to a company press release. 

• The retailer expanded margins 42 basis points from 39.1% last year to 39.5% in the quarter, as reported net income rose 40% to $292 million from $208 million a year ago.

• The company raised its diluted earnings guidance for its full fiscal 2018 year to between $4.96 and $5.36 per share, up from its prior forecast of between $4.86 and $5.31 per share.

Dive Insight:

Kohl's appears to be making the best of its advantages, which include strong loyalty from shoppers and locations mostly apart from struggling malls. But strong new initiatives in supply chain and merchandising, as well as omnichannel services are also helping set it apart from rivals, analysts say.

In the recent past, its stores have been jumbled, but the retailer has cleaned things up and is taking control of its inventory levels and clearance racks, according to analysts at Jane Hali & Associates. Kohl's' partnership with Amazon, which some analysts had viewed as a potentially troubling move, is driving more shoppers to its stores. That has prompted an expansion of the program to 21 more stores in hometown Milwaukee.

The discount department store is also getting its merchandise mix right, according to Jane Hali analysts, who found activewear prominent during recent store visits in Texas and Florida. In September, the retailer is also launching a collaboration with media platform PopSugar. That will benefit from the retailer's new supply speed initiative, which has reduced concept to floor time line by about 40%, according to Jane Hali. 

Other partnerships with Lego and FAO Schwarz and its exclusive LC Lauren Conrad denim, Simply Vera Vera Wang and Urban Pipeline brands are all stoking shopper interest, according to GlobalData Retail Managing Director Neil Saunders. The retailer will have some difficulty maintaining its robust year-over-year increases, but it remains in a good position to continue its momentum, Saunders said. 

"A much stronger assortment, presented in a more compelling way are key reasons for Kohl's success with customers," he said in comments emailed to Retail Dive, adding that those have been supported by well-received changes to its popular loyalty program. "Initial results from this appear to be encouraging, with customers welcoming the simplified rewards structure and the greater access to sales events and promotions."

The wider economy is also boosting Kohl's, but it's not doing much for some of its competitors, and those retailers should be nervous. "The buoyant market is helping [Kohl's] to produce better results, but it is also helping itself and is stealing customers from rivals like JC Penney," Saunders said.