Kohl’s (KSS) shares rose as much as 7% in early trading after the company beat Wall Street earnings expectations by $0.15 per share and raised its earnings forecast.

In the second quarter, the retailer doubled its inventory levels and spending, leading to a 9% year-over-year decline in inventory. It 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.

Kohl’s 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.

However, the company 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.

The company now expects a decline in like-for-like sales of between 3 and 5 percent for the 2024 financial year, more than the previously expected decline of 1 to 3 percent compared to the previous year.

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

In 2024, the company added a total of 140 locations, surpassing the 1,000 Sephora stores within Kohl’s.

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