FILE PHOTO: The Kohl’s label is seen on a shopping cart in a Kohl’s department store in the Brooklyn borough of New York, U.S., January 25, 2022. REUTERS/Brendan McDermid/File Photo
The Kohl’s label is seen on a shopping basket in a Kohl’s department store in the Brooklyn borough of New York, U.S., January 25, 2022. REUTERS/Brendan McDermid

(Reuters) -Kohl's on Tuesday forecast a smaller drop in sales and bigger profit for the full year, as the U.S. department-store operator banks on new collections and promotions to drive demand during the holiday season, sending its shares surging 28%.

The second annual forecasts raise this year also signals early success of the company's turnaround efforts under Michael Bender, who was named permanent CEO on Monday.

Bender has focused on adding more coupon-eligible brands to store shelves and investing in proprietary brands to attract value-focused customers from the lower- and middle-income groups, struggling with still-high inflation and tariff-induced higher prices.

The company has also ramped up partnerships like Sephora -featuring trendy brands like Selena Gomez's Rare Beauty, Prada's Miu Miu, and L'Oreal's Kerastase - aimed at drawing in younger shoppers to its mid-tier department stores.

Kohl's expects fiscal 2025 adjusted earnings per share to be between $1.25 and $1.45, compared with the prior range of 50 cents to 80 cents.

The company expects annual sales to decline in the range of 3.5% to 4%, compared with the prior forecast of a decrease of 5% to 6%.

Kohl's posted quarterly sales of $3.41 billion, compared with analysts' estimates of $3.32 billion, according to data compiled by LSEG.

Shares of rival Macy's rose about 5% in premarket trading.

(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Sriraj Kalluvila)