Kohl`s Corp
Q2 2026 Earnings
Market Reaction
S&P 500 over the same 30 days: +2.64%.
Did KSS Beat Earnings? Q2 2026 Results
Kohl's delivered a sharply stronger-than-expected second quarter, with adjusted diluted EPS of $0.56 coming in 87.98% ahead of the $0.30 consensus estimate, while revenue of $3.55 billion topped expectations by 5.27% despite falling 5.0% year-over-year. The standout driver was a $129 million gain from a credit card interchange fee lawsuit settlement, which pushed GAAP net income to $153 million and GAAP diluted EPS to $1.35, though the underlying adjusted result still reflected the retailer's ongoing turnaround work, including a 28-basis-point gross margin expansion and a 4.1% reduction in SG&A expenses. Strategically, the completed full-chain rollout of Sephora at Kohl's, along with impulse queue line expansions driving 30% category sales growth, offered early evidence that the company's merchandising initiatives are gaining traction, even as <a href="https://247wallst.com/investing/2025/07/22/can-kohls-kss-hit-20-dollars-today/">questions about the stock's trajectory</a> persist. Management raised its full-year 2025 outlook, now projecting adjusted diluted EPS of $0.50 to $0.80 and comparable sales declining 4% to 5%, while a dividend cut to $0.50 annually signals continued prioritization of balance sheet flexibility.
- Gross margin expansion of 28 basis points driven by proprietary brand penetration, category mix benefit, and strong inventory management
- SG&A expenses reduced 4.1% year-over-year through lower spending in stores and marketing
- Proprietary brands outperformed the company in Q2, showing 500 basis points of progressive improvement from Q1
- Impulse queue line expansion to over 300 additional stores delivered 30% sales growth in Q2
- $129 million gain on legal settlement from credit card interchange fee lawsuit
- Inventory reduced 5% year-over-year to $3.0 billion
- Shift from credit expense to other revenue benefited SG&A
“Kohl's second quarter performance is a testament to the progress we are making against our 2025 initiatives. This resulted in sales performance that came in ahead of our expectations. While it is clear that these initiatives are beginning to resonate with our customers, our team remains focused on delivering progressive improvement throughout the remainder of the year against a challenging economic backdrop.”
Kohl's CEO, on the earnings call
Forward Guidance & Outlook
For full year 2025, Kohl's raised its financial outlook: net sales expected to decrease 5% to 6% versus 2024; comparable sales expected to decrease 4% to 5%; adjusted operating margin of 2.5% to 2.7%; adjusted diluted EPS of $0.50 to $0.80. Capital expenditures are expected to be approximately $400 million. The Board reduced the annual cash dividend to $0.50 per share to provide greater balance sheet flexibility. Management noted a focus on rebuilding cash balance, reducing revolver reliance, and capitalizing on opportunities to further reduce debt and overall leverage, with share repurchases to resume over the long-term with excess cash flow following improvement in leverage.
KSS YoY Financials
Figures from SEC filings and company reports. Not investment advice.