Kohl’s on Wednesday beat quarterly profit estimates and raised its annual forecast as the department store operator relied on lower costs and lower inventory levels ahead of a discount-heavy holiday shopping season.

The company’s shares, which had fallen 31.7 percent so far this year, rose 4 percent on Wednesday.

Thanks to sales earlier this year, Kohl’s was able to offer newer styles in baby products and women’s clothing during the important spring shopping season.

Cosmetics retailer Sephora was again a bright spot, helping to offset the impact of weaker sales in Kohl’s core apparel and footwear businesses.

Inventory declined 9% in the second quarter, after falling 13% in the previous quarter. Gross margin increased 59 basis points, after increasing 48 basis points in the first quarter.

Kohl’s now expects annual earnings per share between $1.75 and $2.25, compared to $1.25 to $1.85 previously.

Department stores are struggling with uneven demand from customers across different income groups who are hunting for bargains while also spending money on trendier products like wide-leg jeans and logo-free shirts.

“Kohl’s position in the retail landscape also makes the company very vulnerable to fluctuations in consumer spending habits,” said Zak Stambor, senior analyst at Emarketer.

“As the company progresses on the bottom line, it must develop a stronger value proposition and a unique market identity.”

Kohl’s plans to increase its promotion of lower prices this year while also boosting the holiday shopping season, which management says will be a big sales boost.

This reflected comments from Macy’sopens new tabwhich had cut its forecast for annual net sales after warning of weak spending and stronger promotions.

Meanwhile, Nordstromopens new tab beat quarterly profit expectations on Tuesday due to robust sales at its off-price brands.

Kohl’s reported a 5.1 percent decline in comparable sales for the quarter, which was larger than expected. The company now expects net sales to decline between 4 percent and 6 percent on an annual basis.

Excluding special items, Kohl’s earned 59 cents per share, beating estimates of 45 cents, according to LSEG data.