KSS earnings analysis
What we found in KSS's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Kohl's delivered a mixed Q2: total revenue fell 0.9% year over year to $3.515 billion and diluted EPS declined to $1.28 from $1.35, but gross margin expanded 305 basis points to 43.0%, aided materially by approximately $100 million of tariff refunds recognized in cost of merchandise sold. Digital sales grew 2.8%, liquidity improved with $821 million of cash, and debt was reduced by $113 million year to date. However, operating cash flow declined to $478 million for the first half, sales remained under pressure, and future margin benefits are exposed to tariff uncertainty.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Sales declined modestly year over year
- Q2 total revenue was $3.515 billion, down $31 million, or 0.9%, from $3.546 billion a year ago. Net sales declined 0.9% and comparable sales also decreased 0.9%.
- Tariff refunds lifted gross margin
- Gross margin expanded to 43.0% from 39.9%, a 305-basis-point improvement. Approximately $150 million of tariff refunds were received in the quarter, with approximately $100 million recognized in cost of merchandise sold.
- Operating margin remained solid despite sales decline
- Operating income was $261 million, or 7.4% of revenue, versus $279 million, or 7.9%, in the prior-year quarter. SG&A declined 0.9% to $1.188 billion and remained 33.8% of revenue.
- Reported EPS declined 5.2%
- Diluted EPS was $1.28 versus $1.35 in the prior-year quarter, while net income was $151 million versus $153 million. The prior-year period included a $129 million legal-settlement gain, making reported comparisons non-recurring.
- Digital and selected categories outperformed
- Digital sales increased 2.8% year over year and represented 27% of net sales versus 26% last year. Home, Accessories, and Children's performed better than the company average.
- Liquidity and working capital strengthened
- Cash and cash equivalents increased to $821 million from $174 million a year ago, while working capital increased to $1.323 billion from $926 million and the current ratio improved to 1.49 from 1.36.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Tariff recovery may not recur
- The filing adds expanded global trade-policy risk. Kohl's submitted approximately $185 million of IEEPA refund claims and had received approximately $150 million by August 1, 2026, including approximately $100 million recognized in cost of merchandise sold; remaining refunds remain uncertain, while new tariffs could increase merchandise costs and pressure future margins.
- Expanding ESG compliance burden
- The filing adds ESG and sustainability regulatory risk, including product, packaging, and climate-reporting requirements. Kohl's operates 1,151 stores, so compliance costs, sales restrictions, or fines across its retail footprint could affect results and liquidity.
- Cash demands remain elevated
- Operating cash flow declined to $478 million for the first half from $506 million a year ago, while inventory increased to $2.913 billion from $2.745 billion at January 31, 2026. The company also expects $350-$400 million of 2026 capital expenditures and plans approximately $100 million of share repurchases, increasing demands on cash generation.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $1.28
- Gross margin
- 43.0%
- Operating margin
- 7.4%
- Segment
- Single reportable segment; Q2 net sales were $3,318 million, down 0.9% year over year.
- Segment
- Women's: $928 million, down 1.6% year over year.
- Segment
- Accessories, including Sephora: $1,315 million, down 0.3% year over year.
- Segment
- Men's: $1,249 million, down 1.0% year over year.
- Segment
- Home, Accessories, and Children's outperformed the company average; Footwear declined 3.7% in Q2.
What they said about what is next.
No numeric revenue or EPS guidance was provided. Management plans approximately $350-$400 million of 2026 capital expenditures and approximately $100 million of 2026 share repurchases.
The filing reads about the same as the one before it.
What came before.
- 10-Q · June 4, 2026
- Kohl's Corporation reported Q1 2026 earnings with total revenue of $3.17 billion, a 2.05% decrease from the prior year's Q1 of $3.23 billion. Gross margin remained stable at 39.9%, though operating income fell to $46…
- 10-K · March 19, 2026
- Kohl’s 10-K emphasizes an omnichannel strategy built on 1,153 U.S. stores, a mix of proprietary and national brands, and distribution through nine retail distribution centers and four e‑commerce fulfillment centers.…
- 10-Q · December 3, 2025
- Kohl’s reported third-quarter total revenue of $3,575 million, down from $3,710 million a year ago, and diluted EPS of $0.07 (vs. $0.20 prior year). Operating income for the quarter declined to $73 million from $98…
- 10-Q · September 4, 2025
- Kohl’s reported total revenue of $3,546 million in the quarter (down from $3,732 million a year ago) and GAAP diluted EPS of $1.35 (up from $0.59). Operating income improved to $279 million versus $166 million in the…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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