Kohl's Corporation

What they do

Kohl's sells apparel, footwear, accessories, beauty, and home merchandise through 1,151 stores and its website as of August 1, 2026, down from 1,153 stores as of January 31, 2026. Stores carry a largely consistent assortment, while the website offers both in-store merchandise and online-only items. Merchandise is received at nine retail distribution centers and four e-commerce fulfillment centers, and digital orders can be picked up in stores or shipped from fulfillment centers, stores, or third-party vendors. Around 84,000 associates were employed on average during 2025, roughly 29,000 full-time and 55,000 part-time.

Revenue drivers

• Proprietary brands — Brands available only at Kohl's, including Apt. 9, Croft & Barrow, FLX, Jumping Beans, SO, Sonoma Goods for Life, and Tek Gear, plus exclusive brands such as LC Lauren Conrad, Nine West, and Simply Vera Vera Wang. These generally carry lower selling prices but higher gross margins than national brands.
• National brands — Third-party national brand apparel, footwear, accessories, beauty, and home products sold alongside proprietary brands at moderately-priced levels across stores and Kohls.com.
• Digital channel — Digital sales were approximately flat in 2025 and represented 29% of net sales in 2025 versus 28% in 2024, including omnichannel transactions fulfilled through stores.
• Other revenue — Non-merchandise revenue such as shipping and deferred revenue items; $197 million in the second quarter of 2026 and $366 million in the first half of 2026.

Recent performance

In the second quarter ended August 1, 2026, net sales fell 0.9% to $3.3 billion with comparable sales down 0.9%. Gross margin rose 305 basis points to 43.0%, helped by about $100 million of tariff refunds recognized in gross margin out of roughly $150 million received. Operating income was $261 million versus $279 million a year earlier, and net income was $151 million, or $1.28 per diluted share, versus $153 million, or $1.35. For the first half, net sales fell 1.2% to $6.3 billion and net income was $137 million, or $1.18 per diluted share. Inventory was $2.9 billion, down 3% year-over-year, and second-quarter operating cash flow was $552 million versus $598 million.

Strategy

Management states three key initiatives: a curated, more balanced assortment that fulfills the needs of all customers; reestablishing Kohl's as a leader in value and quality; and delivering a frictionless shopping experience across omnichannel platforms. The company describes progress in building a stronger balance sheet through operational focus to fund investment in the business and return capital to shareholders. The 10-K strategy language similarly commits to great product, great value, and a great experience, supported by a more balanced assortment and value and quality leadership.

Risks

• Declining sales trend — Net sales declined from $17.48 billion in fiscal 2024 to $15.53 billion in fiscal 2026, and management guides fiscal 2026 net sales and comparable sales to a decrease of 1.5% to flat.
• Comparable sales weakness — Comparable sales fell 3.1% in fiscal 2025 and 0.9% in the second quarter of 2026, with the quarterly decline driven equally by lower average transaction value and lower transaction volume.
• Profitability dependent on non-recurring items — Fiscal 2025 operating income of $624 million included a $129 million gain on a credit card interchange fee lawsuit settlement, and second-quarter 2026 gross margin included about $100 million of tariff refunds; adjusted operating income was $510 million in fiscal 2025 versus $624 million GAAP.
• Debt and refinancing cost — Long-term debt was $1.32 billion as of August 1, 2026, and fiscal 2025 included issuance of $360 million of 10.000% senior secured notes due 2030, partially offset by $87 million of open market debt repurchases.

Outlook

For full year 2026, Kohl's raised guidance to net sales and comparable sales of a decrease of 1.5% to flat, adjusted operating margin of 3.5% to 4.0%, and adjusted diluted EPS of $1.80 to $2.40, including the benefit of IEEPA tariff refunds received in the second quarter. This compares with the prior 10-K outlook for fiscal 2026 of net sales and comparable sales down 2% to flat, adjusted operating margin of 2.8% to 3.4%, and adjusted diluted EPS of $1.00 to $1.60. The company also stated it is restarting its share repurchase program and declared a quarterly dividend of $0.125 per share payable April 1, 2026. Fiscal 2026 capital expenditures are expected to be approximately $350 million to $400 million.