Kohl’s Corp., seeing slowing sales declines, reduced expenses and signs that turnaround initiatives are starting to kick in, raised its outlook for the year.
On Wednesday, Kohl’s reported that for the second quarter ended Aug. 1, net and comparable sales decreased 0.9 percent to $3.32 billion, from $3.35 billion in the year-ago period.
Operating income was $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.
Net income was $151 million, or $1.28 per diluted share, compared to net income of $153 million, or $1.35 per diluted share.
You May Also Like
Tariff refunds of about $150 million were received, of which about $100 million flowed through gross margin and contributed 65 cents to earnings per share. Another $40 million are expected to be received.
“We are pleased with the start of Q3 overall and back-to-school specifically,” Michael Bender, Kohl’s chief executive officer, told WWD. “There’s still obviously a lot ahead of us in that time frame but I would point to things that are driving our performance. We’ve got thousands of items under $25. Fleece, denim, sweaters and footwear as categories you would naturally want to see tick up during this period and we’re seeing that.
“It’s all geared around this message about offering value you’ve heard us talk about, and that customers recognize the value when they come into the store. We’ve also been working on the store environment quite a bit and continuing to bring more clarity to the assortment. We’re taking choice counts down and making sure there is depth” on key items. “That seems to be paying off.”
Bender said funds from the tariff refunds are being used to further drive value, increase hours of associates in the stores, and media spend. The refunds, he said, “have given us more flexibility.”
Asked about the outlook for holiday 2026, Bender didn’t forecast but said, “We are certainly laying in place plans to make sure holiday is a win.” He said some categories constrained last year by tariffs pose opportunities this fall and into holiday including “Americana” decor, team apparel, and small electronics.
“Anything with a cord was tough to move through last year. That’s not a challenge this time around,” Bender said.
For the full year 2026, the company now expects net and comparable sales to be down 1.5 percent to flat; adjusted operating margin in the range of 3.5 percent to 4 percent, and adjusted diluted earnings per share in the range of $1.80 to $2.40.
Previously, Kohl’s projected net and comparable sales to be 2 percent to flat; adjusted operating margin in the range of 2.8 to 3.4 percent, and adjusted diluted earnings per share In the range of $1 to $1.60.
Despite the improvement , Wall Street in pre-market trading Wednesday took Kohl’s share price down nearly 8 percent to $16.29 amid concerns about retailing generally going forward and expectations that Kohl’s would have been even more optimistic on the year despite its raised outlook.
Among Kohl’s turnaround efforts, the store has a revamped back-to-school presentation for 2026, prioritizing Nike, Levi’s, and opening prices on private brands. There’s also improved signage, more mannequins to show trends and styles, and a new AI shopping assistant.
Additionally, Kohl’s has simplified its merchandising in the stores to focus on fewer, better-selling brands being carried in greater depth, for what executives describe as “easier, simpler shopping, and clarity” in the offering. Key items are being positioned more prominently.
“We are confident that the work we are executing is leading us in the right direction,” Bender said in a statement Wednesday. “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.”
During the quarter, gross margin as a percentage of net sales was 41.5 percent, an increase of 162 basis points.
Selling, general and 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 six basis points year-over-year.
Long-term debt decreased $195 million compared 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.
Kohl’s is reversing duplicate online charges caused by a glitch in processing transactions. The issue primarily impacted shoppers who placed online orders and were charge twice between July 24 and Aug. 19.
“It was a processing issue, not a data breach,” Bender said. “We have communicated with all customers that were impacted and we are reversing those charges. Customers should see the reversal of those charges depending on how quickly their bank are able to process the reversal. We’ve apologized to those customers. It did not impact sales at all.”
In other news at Kohl’s, Arianne Parisi has been named chief customer officer, reporting to Bender. In this newly-created role, Parisi will be responsible for enhancing the omnichannel customer experience across marketing, brand and creative, loyalty, personalization, media, and digital commerce, including Kohls.com and the Kohl’s App. Parisi, who has more than 20 years of retail experience, has been Kohl’s chief digital officer since 2025.
“Bringing marketing and digital together under one leader will help foster a greater focus on the full customer lifecycle and how Kohl’s shows up across customer touchpoints,” Bender said. “Arianne always starts with the customer – making sure that how we position ourselves as a brand and how we execute as a business both deliver on our customer promise. She has an excellent ability to work collaboratively with a variety of functions across the business to accomplish shared goals. She has shown agility in anticipating evolving customer expectations and translating them into action, an approach that will help Kohl’s build for the future.”
In her expanded role at Kohl’s, Parisi takes on responsibilities that were handled by Christie Raymond, the chief marketing officer, who is leaving the company in September. Prior to joining Kohl’s in 2025, Parisi was global chief digital officer at JD Sports Fashion. Earlier, she held progressive digital leadership roles at The Finish Line and Nordstrom, as well as merchandising roles at The Sports Authority.
