On an analyst call, Michael Bender, Kohl’s CEO, said the retailer plans to roll out stronger promotional offers and increase the depth of key styles as Q4 sales missed plan. Footwear landed among the categories that “underperformed” in the quarter due to softness in active styles and boots.

“We expected our boots business to remain soft in the fourth quarter and proactively reduced our buys based on pricing expectations,” said Bender. “The strength in dress and casual footwear across men’s and women’s businesses partially offset this category softness.”

Asked further about footwear performance during the Q&A session, CFO Jill Timm said the category is “doing well” across dress and casual styles. Boots were expected to be “tough” as Kohl’s acquired less inventory due to the category’s exposure to tariffs.

Timm attributed the weakness in active to a lack of innovation and said Kohl’s is “working really closely with our top three partners” in active — Nike, Adidas and Under Armour — to bring some newness.

Timm said, “I think we do expect to see some momentum build in that category throughout the year, but I would say we would probably be set better from that perspective for back-to-school into fall, just because of the change that it does take to get there. So I would say, from a footwear perspective, I expect it to probably lag the front half of the year, but by the back half of the year, get back into parity from a comp perspective, just given we do have a big active footwear business, and that will take some time to bring that innovation through from that perspective.”

Fourth Quarter 2025 Results
(comparisons refer to the 13-week period ended January 31, 2026, versus the 13-week period ended February 1, 2025)

  • Net sales decreased 3.9 percent year-over-year, to $5.0 billion, with comparable sales down 2.8 percent.
  • Gross margin as a percentage of net sales was 33.1 percent, up 25 basis points.
  • Selling, general & administrative (SG&A) expenses decreased 4.9 percent year-over-year, to $1.5 billion. As a percentage of total revenue, SG&A expenses were 28.3 percent, a 23-basis-point decrease year- over-year.
  • Operating income was $212 million compared to $126 million in the prior year. Adjusted operating income was $202 million in the prior year. As a percentage of total revenue, operating income was 4.1 percent, an increase of 176 basis points year-over-year and an increase of 35 basis points year-over-year compared to the prior year adjusted operating income.
  • Net income was $125 million, or $1.07 per diluted share, compared to net income of $48 million, or 43 cents per diluted share, and adjusted net income of $106 million, or 95 cents per adjusted diluted share, in the prior year.
  • Inventory was $2.7 billion, down 7 percent year-over-year.
  • Cash flow provided by operating activities was $750 million compared to $596 million in the prior year.
  • Borrowings under the revolving credit facility were $0, a decrease of $290 million year-over-year.

The comp decline of 3.9 percent missed analysts’ consensus expectation of a 1.3 percent decrease. However, earnings of $1.07 topped analysts’ consensus expectation of 95 cents.

Shares of Kohl’s on Tuesday closed at $14.58, down 22 cents.

Management Quarterly Commentary
Bender said, “strong inventory discipline and expense management” supported the earnings beat in the quarter, but he said the retailer was “not pleased with our top-line results.” Severe weather was responsible for about 70 basis points of the comparable sales decline as approximately half of Kohl’s stores were closed during the winter storms in January.

Beyond the weather, Bender said Kohl’s saw softness in its fall seasonal business due to a shortage of “inventory depth and allocation.” He added, “We did not consistently have the right product in the right quantity in the right places. This issue was outsized in our smaller-format stores, which meant we were not consistently able to meet the demand in key moments. However, we continued to experience positive growth in our year-round businesses, including the emphasis on core basics and essentials, which were not impacted by inventory allocation issues.”

Second, he believed Kohl’s didn’t offer enough “breakthrough pricing during our key holiday shopping periods” with consumers particularly seeking out value. He said, “There is an opportunity for us to regain share during these windows through strong promotional statements that better align to our customers’ needs and priorities.”

Among products beyond footwear, Kohl’s again made “solid progress” with its proprietary brands, which were down 3 percent in the quarter, driven by a particularly weak home category.

Kohl’s junior business grew 8 percent, driven by its So brand. Bender said, “We are furthest along in our progress with this category, as it has faster turns and shorter lead times. We are excited about taking this momentum from the juniors’ business and expanding the efforts throughout the remainder of the women’s category.”

Petites, within women’s, was up 26 percent year-over-year, benefiting from a stronger in-store presence in key proprietary brands, LC Lauren Conrad and Simply Vera Wang. Men’s and kids apparel departments also showed strength in proprietary brands, both running positive comps in the fourth quarter and driven by FLX, Tek Gear, Jumping Beans, and Apartment 9. The weakness in the home proprietary brand business was largely due to softness in seasonal décor and not enough depth in assortments.

Fiscal Year 2025 Results
(comparisons refer to the 52-week period ended January 31, 2026, versus the 52-week period ended February 1, 2025)

  • Net sales decreased 4.0 percent year-over-year, to $14.8 billion, with comparable sales down 3.1 percent.
  • Gross margin as a percentage of net sales was 37.5 percent, up 34 basis points.
  • Selling, general & administrative (SG&A) expenses decreased 4.1 percent year-over-year, to $5.1 billion. As a percentage of total revenue, SG&A expenses were 32.8 percent, up 5 basis points year-over-year.
  • Gain on legal settlement was $129 million from a credit card interchange fee lawsuit settlement.
  • Operating income was $624 million compared to $433 million in the prior year. As a percentage of total revenue, operating income was 4.0 percent, up 135 basis points year-over-year. Adjusted operating income was $510 million compared to $509 million in the prior year. As a percentage of total revenue, adjusted operating income was 3.3 percent, up 15 basis points year-over-year.
  • Net income was $272 million, or $2.38 per diluted share, and adjusted net income was $186 million, or $1.62 per adjusted diluted share. This compares with net income of $109 million, or $0.98 per diluted share, and adjusted net income of $167 million, or $1.50 per adjusted diluted share, in the prior year.
  • Cash flow provided by operating activities was $1.4 billion compared to $648 million in the prior year.
  • Current portion of long-term debt was reduced by $353 million through repayment of the 4.25 percent notes due July 2025 at maturity.
  • Long-term debt increased $262 million through issuance of $360 million of 10.000 percent senior secured notes due 2030, partially offset by open market repurchases of $87 million of our outstanding long-term debt.

2026 Financial and Capital Allocation Outlook

For the full year 2026, the company currently expects the following:

  • Net sales and comparable sales: A decrease of (2 percent) to flat
  • Adjusted operating margin: In the range of 2.8 percent to 3.4 percent
  • Adjusted diluted EPS: In the range of $1.00 to $1.60
  • Capital expenditures: Approximately $350 to $400 million
  • Dividend: On February 25, 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 April 1, 2026, to shareholders of record at the close of business on March 18, 2026.

 Image courtesy Kohl’s