KOHLS Corp (KSS): Results of Operations and Financial Condition
KOHLS Corp (KSS) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Kohl’s Reports Second Quarter Fiscal 2026 Financial Results MENOMONEE FALLS, Wis.—(BUSINESS WIRE)—August 26, 2026— Kohl’s Corporation (NYSE: KSS) (“Kohl’s” or the “Company”) today reported results for the second quarter ended August 1, 2026. • Net sales decreased 0.9
How this was made
The 30-second read
Why it matters
The earnings beat on margin and the guidance lift provide a fresh catalyst for short‑term trading decisions.
Market read
First‑report earnings and guidance for a large U.S. retailer, likely to influence its stock and sector sentiment.
What to watch
Inventory reduction and tariff refunds may mask underlying demand weakness.
Kohl’s reported second-quarter diluted EPS of $1.28, expanded gross margin by 305 basis points, raised full-year 2026 outlook, and restarted share repurchases.
Gross-margin expansion, full-year guidance increases, improved balance-sheet liquidity, and resumed buybacks offset continued declines in net sales and comparable sales and lower year-over-year operating income.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, three months ended August 1, 2026GAAP | $3.3 billion | – | decreased 0.9% year-over-year |
| Comparable sales, three months ended August 1, 2026other | decreased 0.9% | – | decreased 0.9% |
| Other revenue, three months ended August 1, 2026GAAP | $197 million | – | – |
| Total revenue, three months ended August 1, 2026GAAP | $3,515 million | – | – |
| Gross margin rate, three months ended August 1, 2026GAAP | 43.0% | – | increased 305 basis points year-over-year |
| Cost of merchandise sold, three months ended August 1, 2026GAAP | $1,893 million | – | – |
| Selling, general, and administrative expenses, three months ended August 1, 2026GAAP | $1.2 billion | – | decreased 0.9% year-over-year |
| Selling, general, and administrative expenses as a percent of total revenue, three months ended August 1, 2026GAAP | 33.8% | – | consistent with the prior year |
| Depreciation and amortization, three months ended August 1, 2026GAAP | $173 million | – | – |
| Operating income, three months ended August 1, 2026GAAP | $261 million | – | – |
| Operating income margin, three months ended August 1, 2026GAAP | 7.4% of total revenue | – | decrease of 45 basis points year-over-year |
| Adjusted operating income, three months ended August 1, 2026non-GAAP | $261 million | – | – |
| Adjusted operating income margin, three months ended August 1, 2026non-GAAP | 7.4% of total revenue | – | – |
| Interest expense, net, three months ended August 1, 2026GAAP | $63 million | – | – |
| Income before income taxes, three months ended August 1, 2026GAAP | $198 million | – | – |
| Provision for income taxes, three months ended August 1, 2026GAAP | $47 million | – | – |
| Net income, three months ended August 1, 2026GAAP | $151 million | – | – |
| Diluted earnings per share, three months ended August 1, 2026GAAP | $1.28 per diluted share | – | – |
| Adjusted net income, three months ended August 1, 2026non-GAAP | $151 million | – | – |
| Adjusted diluted earnings per share, three months ended August 1, 2026non-GAAP | $1.28 per adjusted diluted share | – | – |
| InventoryGAAP | $2.9 billion | – | decrease of 3% year-over-year |
| Operating cash flow, three months ended August 1, 2026GAAP | $552 million | – | – |
| Tariff refunds received in the quarterother | approximately $150 million | – | – |
| Tariff refunds flowing through gross margin in the quarterother | approximately $100 million | – | – |
| Net sales, six months ended August 1, 2026GAAP | $6.3 billion | – | decreased 1.2% year-over-year |
| Comparable sales, six months ended August 1, 2026other | down 1.0% | – | down 1.0% |
| Total revenue, six months ended August 1, 2026GAAP | $6,682 million | – | – |
| Gross margin rate, six months ended August 1, 2026GAAP | 41.5% | – | increase of 162 basis points |
| Operating income, six months ended August 1, 2026GAAP | $307 million | – | – |
| Net income, six months ended August 1, 2026GAAP | $137 million | – | – |
| Diluted earnings per share, six months ended August 1, 2026GAAP | $1.18 per diluted share | – | – |
| Operating cash flow, six months ended August 1, 2026GAAP | $478 million | – | – |
| Capital expenditures, six months ended August 1, 2026GAAP | $146 million | – | – |
Full year 2026 outlook
- RevenueNet sales and Comparable sales: A decrease of (1.5%) to flat
- NoteAdjusted Operating margin: In the range of 3.5% to 4.0% (non-GAAP)
- NoteAdjusted Diluted EPS: In the range of $1.80 to $2.40 (non-GAAP)
- NoteCapital Expenditures: In the range of $350 million to $400 million
- NoteDividend: quarterly cash dividend of $0.125 per share, payable September 23, 2026 to shareholders of record at the close of business on September 9, 2026
- NoteRestarting share repurchases of up to $100 million in 2026 under existing $3 billion authorization
Capital returns
- On August 18, 2026, Kohl’s Board of Directors declared a quarterly cash dividend 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.
- The Company is restarting share repurchases of up to $100 million in 2026 under its existing $3 billion authorization.
- Dividends paid during the six months ended August 1, 2026 were $28 million.
- The Company repurchased $113 million of debt at a discount of $15 million in 2026.
What drove it
- Gross margin increased 305 basis points year-over-year to 43.0% in the second quarter.
- Approximately $150 million of tariff refunds were received in the quarter, with approximately $100 million flowing through gross margin.
- SG&A expenses decreased 0.9% year-over-year to $1.2 billion, while SG&A as a percentage of total revenue remained 33.8%.
- Inventory decreased 3% year-over-year to $2.9 billion.
- Management said second-quarter results reflected ongoing progress against its initiatives and another improvement in comparable-sales trend.
Concerns
- Second-quarter net sales decreased 0.9% year-over-year to $3.3 billion and comparable sales decreased 0.9%.
- Second-quarter operating income declined to $261 million from $279 million, while operating income margin decreased 45 basis points year-over-year to 7.4% of total revenue.
- Second-quarter net income decreased to $151 million from $153 million, and diluted EPS decreased to $1.28 from $1.35.
- The full-year outlook continues to contemplate net sales and comparable sales ranging from a decrease of (1.5%) to flat.
- The company stated that its raised outlook includes the benefit of IEEPA Tariff refunds received in the second quarter.
What to watch
- Whether net sales and comparable sales progress from the second-quarter decreases of 0.9%.
- The durability of gross margin after approximately $100 million of tariff refunds flowed through gross margin in the quarter.
- Execution against full-year adjusted operating-margin guidance of 3.5% to 4.0%.
- Execution of up to $100 million of 2026 share repurchases and the quarterly dividend of $0.125 per share.
- Capital expenditures relative to the full-year range of $350 million to $400 million.
Balance sheet and cash flow
- Cash and cash equivalents were $821 million as of August 1, 2026, compared with $174 million as of August 2, 2025.
- Merchandise inventories were $2,913 million as of August 1, 2026, compared with $2,994 million as of August 2, 2025.
- Long-term debt was $1,325 million as of August 1, 2026, compared with $1,520 million as of August 2, 2025.
- Borrowings under the revolving credit facility were $0 as of August 1, 2026, compared with $75 million as of August 2, 2025.
- 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.
- Net cash provided by operating activities was $478 million for the six months ended August 1, 2026, compared with $506 million in the prior year.
- Net cash used in investing activities was $153 million for the six months ended August 1, 2026, compared with $179 million in the prior year.
- Net cash used in financing activities was $178 million for the six months ended August 1, 2026, compared with $287 million in the prior year.
- Cash and cash equivalents increased $147 million during the six months ended August 1, 2026.
Analysis
Kohl’s second-quarter sales remained under pressure, with net sales of $3.3 billion and comparable sales both decreasing 0.9% year-over-year. The six-month result was also negative, with net sales down 1.2% to $6.3 billion and comparable sales down 1.0%. Management nevertheless characterized the quarter as another improvement in comparable-sales trend, but the filing does not provide prior-quarter comparable-sales data for a sequential comparison.
Profitability was supported by a substantial gross-margin improvement. The second-quarter gross margin rate reached 43.0%, up 305 basis points year-over-year, while the six-month rate was 41.5%, up 162 basis points. Approximately $150 million of tariff refunds were received in the quarter, and approximately $100 million flowed through gross margin. SG&A declined 0.9% to $1.2 billion and held at 33.8% of total revenue, but GAAP operating income fell to $261 million from $279 million and operating margin declined 45 basis points to 7.4% of total revenue.
Reported earnings comparisons are affected by prior-year non-GAAP adjustments. Second-quarter GAAP net income was $151 million, or $1.28 per diluted share, compared with $153 million, or $1.35 per diluted share, in the prior year. However, current-quarter adjusted operating income, adjusted net income, and adjusted diluted EPS each equaled their respective GAAP measures because there were no listed adjustment items, while the prior-year quarter included store-closing and other costs and a gain on legal settlement. Cash generation also moderated, as second-quarter operating cash flow was $552 million versus $598 million in the prior year and six-month operating cash flow was $478 million versus $506 million.
Balance-sheet measures improved versus the prior year. Cash and cash equivalents were $821 million, inventory was $2,913 million, long-term debt was $1,325 million, and revolving-credit-facility borrowings were zero. During the first six months, the company repaid $113 million of long-term borrowings and recorded a $15 million discount on redemption of debt. Kohl’s also declared a $0.125 per-share quarterly dividend and restarted share repurchases of up to $100 million in 2026 under its existing $3 billion authorization.
The company raised full-year 2026 guidance, explicitly including the benefit of IEEPA Tariff refunds received in the second quarter. It now expects net sales and comparable sales from a decrease of (1.5%) to flat, adjusted operating margin of 3.5% to 4.0%, adjusted diluted EPS of $1.80 to $2.40, and capital expenditures of $350 million to $400 million. The key issues are whether sales can advance from the current negative trend and whether the second-quarter gross-margin benefit can support the raised outlook after the tariff-refund contribution.
Management, verbatim
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.
Michael Bender, Chief Executive Officer
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.
Michael Bender, Chief Executive Officer
Not in the filing
stated, not guessed- Prior-quarter financial results and sequential comparisons
- Prior-quarter outlook for comparison with actual results
- Segment revenue and segment-level operating metrics
- Free cash flow
- Second-quarter capital expenditures
- GAAP gross-margin-dollar amount
- Effective tax rate
- GAAP reconciliations for forward-looking adjusted operating-margin and adjusted diluted-EPS guidance
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Kohl's filed an 8‑K reporting Q2 2026 financials and updated its FY outlook, including a dividend and share repurchase restart.
Ticker impact
Kohl's reported Q2 2026 results with net sales down 0.9% and raised full-year guidance, restarting a $100M share repurchase.
Potential modest price increase as investors digest improved outlook and share repurchase restart.
Guidance lift and buyback are fresh primary disclosures that can move the stock immediately.
Market effects
Retail sector may see modest uplift as Kohl's signals resilience.
U.S. consumer discretionary stocks could benefit from positive earnings cues.
Limited to U.S. markets; no direct global impact.
Counterpoint
Guidance raise may be modest relative to broader retail challenges; price could be pressured if sales continue to decline.
Key entities
- ExecutiveMichael Bender
CEO of Kohl's, provided commentary on results and outlook.
