Three companies beat earnings estimates Wednesday morning but saw their stocks fall, showing how differently investors judged each result.
Kohl's (KSS)
The stock first looked little changed as investors tried to read the report, then fell more than 2.5%, after trading under pressure before the open. Kohl's beat on both the top and bottom line. Adjusted earnings per share came in at $1.28, far above the $0.57 the Street expected - a big beat on the bottom line. Revenue topped $3.5 billion, also better than expected.
The weak part remains sales. Comparable sales fell nearly 1%, 0.9% to be precise. That is a large improvement from a year ago, when the number was down 4.2%, but the turnaround is not moving fast enough for investors. Kohl's has been working on a turnaround yet has not returned to sales growth.
Kohl's serves middle to lower income shoppers, not the upper end. In a K-shaped economy where the top consumer stays strong, its customers face higher prices and are pulling back on discretionary buying, which hurts results. Sales are getting less bad but still not good enough.
By contrast, Abercrombie & Fitch (ANF) rose 27% the same period, a sign of the split running through this earnings season across companies and even within tech.
Zoom (ZM)
Down more than 3%. Zoom beat second quarter expectations, but softer than expected guidance overshadowed the strong results. Adjusted earnings per share came in at $1.55. Revenue rose 4.9% year-over-year.
A key metric stayed strong: customers spending at least $100,000, up 8.2%. That number shows how well Zoom is moving up market toward customers with deeper pockets, who tend to form larger, stickier relationships since it is hard to switch providers when spending that much.
The disappointment sits in the outlook. Third quarter guidance for adjusted earnings per share is $1.46 to $1.48, below what analysts expected. Revenue guidance of $1.275 billion to $1.28 billion also came in slightly below consensus. The strong quarter and the $100,000 customer growth were not enough to keep investors in the stock. Zoom holds a stake in Anthropic, a wild card, but management did not discuss it much on this report.
Williams-Sonoma (WSM)
Down more than 5%. Williams-Sonoma delivered a solid second quarter and raised its full-year outlook. Revenue came in at $1.96 billion, better than expected and up 6.7% year-over-year. Adjusted earnings per share hit $2.10 against the $2.08 expected.
Tariff refunds helped profits, which raises the question of what the number looks like stripped of that help. Management sees the refunds as a one-time benefit, and tariffs remain a headwind despite the refunds - other retailers and companies have reported the same pattern of receiving refunds while still facing tariff pressure. Management said the profit decline came from lower merchandise margins caused by tariff costs. The CEO touted delivery across the board, strong execution, and gained market share.
