Kohl's — Second Quarter Fiscal 2026 Earnings Summary

Financial Performance

• Net sales for the quarter decreased 0.9% year-over-year to $3.3 billion; comparable sales also decreased 0.9%.
• Gross margin increased 305 basis points year-over-year to 43.0% of net sales.
• Selling, general & administrative (SG&A) expenses decreased 0.9% year-over-year to $1.2 billion, remaining consistent at 33.8% of total revenue.
• Operating income was $261 million (7.4% of revenue), down from $279 million in the prior year; adjusted operating income was $161 million.
• Net income was $151 million, or $1.28 per diluted share, compared to $153 million or $1.35 per share in the prior year.
• Inventory decreased 3% year-over-year to $2.9 billion.
• Operating cash flow for the quarter was $552 million, compared to $598 million in the prior year.
• The company received approximately $150 million in tariff refunds during the quarter, with roughly $100 million flowing through gross margin.
• For the six months ended August 1, 2026, net sales decreased 1.2% to $6.3 billion with comparable sales down 1.0%.
• Six-month gross margin was 41.5%, an increase of 162 basis points year-over-year.
• Six-month operating income was $307 million (4.6% of revenue), down from $339 million; adjusted operating income was $221 million.
• Six-month net income was $137 million, or $1.18 per diluted share, compared to $139 million or $1.23 per share in the prior year.
• Long-term debt decreased $195 million year-over-year to $1.325 billion, driven by $113 million of debt repurchased at a discount of $15 million.
• Six-month operating cash flow was $478 million, compared to $506 million in the prior year.

Guidance and Future Outlook

• The company raised its full-year 2026 financial outlook, including the benefit of IEEPA Tariff refunds.
• Full-year 2026 net sales and comparable sales are now expected to decrease 1.5% to flat.
• Full-year 2026 adjusted operating margin is expected to be in the range of 3.5% to 4.0%.
• Full-year 2026 adjusted diluted EPS is expected to be in the range of $1.80 to $2.40.
• Full-year 2026 capital expenditures are expected to be in the range of $350 million to $400 million.

Business Segments and Product Lines

• No specific segment or product line performance data is provided in the press release.

Market and Competitive Landscape

• No specific market share, competitor, or market trend data is provided in the press release.

Risks and Challenges

• Forward-looking statements are subject to risks and uncertainties, including those described in Item 1A of the Company's Annual Report on Form 10-K and Item 1A of Part II of the Quarterly Report on Form 10-Q for the first quarter of fiscal 2026.
• Actual results may differ materially from anticipated results due to these risks and uncertainties.

Management Commentary and Tone

• CEO Michael Bender expressed confidence that the company's work is leading in the right direction, citing ongoing progress against initiatives and an improvement in the comparable sales trend.
• Management noted significant strides in building a strong balance sheet through operational focus, providing a foundation to invest in the business and return capital to shareholders.
• Bender acknowledged that while encouraged by momentum, critical work remains ahead.

Other Key Points

• The company is restarting its share repurchase program, authorizing up to $100 million in 2026 under an existing $3 billion authorization.
• On August 18, 2026, the Board of Directors declared a quarterly cash dividend of $0.125 per share, payable September 23, 2026, to shareholders of record on September 9, 2026.
• Kohl's operates more than 1,100 stores in 49 states, along with online and mobile channels.
• A conference call regarding these results was scheduled for August 26, 2026, at 9:00 am ET.