Kohl’s Corp. sharply raised its EPS guidance for the year as net earnings in the second quarter surged 136 percent on an adjusted basis due to healthier margins. Sales guidance was also increased slightly, although same-store sales slipped 0.9 percent, marking its 18th consecutive quarter of declines.

Earnings at $1.28 easily beating the Wall Street consensus estimate of around 55 to 57 cents per share. Revenue of $3.52 billion matching analyst targets.

Second-Quarter Highlights

  • Net sales decreased 0.9 percent and comparable sales decreased 0.9 percent
  • Gross margin increased 305 basis points
  • Diluted earnings per share of $1.28 and a year to date EPS of $1.18
  • Raises full year 2026 financial outlook
  • Restarting share repurchase program

Michael Bender, Kohl’s chief executive officer, said, “We are confident that the work we are executing is leading us in the right direction. Our second quarter results reflect the ongoing progress against our initiatives, leading to another improvement in our comparable sales trend. While we are encouraged with the momentum we have made thus far, we know there is critical work ahead of us.

Importantly, we have made significant strides in building a strong balance sheet through diligent operational focus across the organization. This provides us a critical foundation as we invest in the business, lead with value for our customers, and return capital to our shareholders. I would like to thank the entire Kohl’s team for their hard work and commitment to serving our customers every day.” Bender continued.

Second Quarter 2026 Results

Comparisons refer to the 13-week period ended August 1, 2026 versus the 13-week period ended August 2, 2025

  • Net sales decreased 0.9 percent year-over-year, to $3.3 billion, with comparable sales also down 0.9 percent.
  • Gross margin as a percentage of net sales was 43.0 percent, an increase of 305 basis points year-over-year.
  • Selling, general & administrative (SG&A) expenses decreased 0.9 percent year-over-year, to $1.2 billion. As a percentage of total revenue, SG&A expenses were 33.8 percent, consistent with the prior year.
  • Operating incomewas $261 million compared to $279 million in the prior year. As a percentage of total revenue, operating income was 7.4 percent, a decrease of 45 basis points year-over-year. Adjusted operating income was $161 million and 4.6 percent of total revenue in the prior year.
  • Net income was $151 million, or $1.28 per diluted share. This compares to net income of $153 million, or $1.35 per diluted share and adjusted net income of $64 million, or $0.56 per adjusted diluted share, in the prior year.
  • Inventory was $2.9 billion, a decrease of 3 percent year-over-year.
  • Operating cash flow was $552 million compared to $598 million in the prior year.
  • Tariff refunds of approximately $150 million were received in the quarter of which approximately $100 million flowed through gross margin.

Six Months Fiscal Year 2026 Results

Comparisons refer to the 26-week period ended August 1, 2026 versus the 26-week period ended August 2, 2025

  • Net sales decreased 1.2 percent year-over-year, to $6.3 billion, with comparable sales down 1.0 percent.
  • Gross margin as a percentage of net sales was 41.5 percent, an increase of 162 basis points.
  • Selling, general & administrative expenses decreased 1.3 percent year-over-year, to $2.3 billion. As a percentage of total revenue, SG&A expenses were 34.9 percent, an increase of 6 basis points year-over-year.
  • Operating income was $307 million compared to $339 million in the prior year. As a percentage of total revenue, operating income was 4.6 percent, a decrease of 41 basis points year-over-year. Adjusted operating income was $221 million and 3.3 percent of total revenue in the prior year.
  • Net income was $137 million, or $1.18 per diluted share. This compares to net income of $139 million, or $1.23 per diluted share, in the prior year and adjusted net income of $50 million, or $0.44 per adjusted diluted share, in the prior year.
  • Long-term debt decreased $195 million to the prior year, primarily driven by $113 million of debt repurchased at a discount of $15 million in 2026 and $87 million of debt repurchases in the prior year.
  • Operating cash flow was $478 million compared to $506 million in the prior year.

2026 Financial and Capital Allocation Outlook

The company raises its guidance and includes the benefit of IEEPA Tariff refunds received in the second quarter. For the full year 2026, the company now expects the following:

  • Net sales and Comparable sales: A decrease of 1.5 percent to flat against prior guidance calling for a decrease of 2 percent to flat
  • Adjusted Operating margin: In the range of 3.5 percent to 4.0 percent against prior guidance estimating 2.8 percent to 3.4 percent
  • Adjusted Diluted EPS: In the range of $1.80 to $2.40 against prior guidance forecasting EPS between $1.00 to $1.60 
  • Capital Expenditures: In the range of $350 million to $400 million, the same as prior guidance
  • Dividend: On August 18, 2026, Kohl’s Board of Directors declared a quarterly cash dividend on the company’s common stock of $0.125 per share. The dividend is payable September 23, 2026 to shareholders of record at the close of business on September 9, 2026.
  • Share Repurchase Program: Restarting share repurchases of up to $100 million in 2026 under existing $3 billion authorization

Image courtesy Kohl’s