Kohl’s Corp reported second-quarter 2026 earnings that exceeded analyst projections despite a decline in revenue, as cost controls and tariff refunds bolstered profitability.
Net income rose to $1.28 per share, well above the $0.57 estimate from Refinitiv, marking a 124.56% positive surprise. Revenue totaled $3.32 billion, missing the $3.4 billion forecast by 2.35%, or $80 million. Comparable sales fell 0.9%, with store sales down 2.0% while digital sales increased 2.8%. Marketplace sales surged 88%, reflecting the company’s push into third-party partnerships.
Gross margin expanded by 305 basis points to 30.5%, driven by approximately $150 million in tariff refunds. Selling, general and administrative expenses declined 0.9%. The company ended the quarter with $821 million in cash and cash equivalents, while long-term debt fell to its lowest level since 2007. Market capitalization stood at $2 billion, with a price-to-earnings ratio of 7.52.
CEO Michael Bender cited persistent macroeconomic pressures, including inflation in essentials such as gas and food, as challenges for consumer spending. He noted a 1% increase in Kohl’s Card customer sales, reversing prior declines, and highlighted targeted initiatives to reengage loyalty program members.
CFO Jill Timm emphasized the financial flexibility gained from $150 million in tariff refunds, which are expected to be reinvested rather than recognized directly as profit. The company maintained its full-year 2026 guidance, projecting comparable sales to decline between 1.5% and flat, with adjusted operating margins of 3.5% to 4.0%. Adjusted earnings per share are forecast at $1.80 to $2.40, including about $0.65 from tariff refunds.
Capital expenditures are projected at $350 million to $400 million, with free cash flow expected near $600 million. Kohl’s plans to resume share repurchases in 2026 with a $100 million buyback program, its first since 2022, while maintaining its 16-year streak of dividend payments at a 2.83% yield.
The retailer’s home category grew 1%, led by small electric appliances and Americana-themed decor. Kids’ business remained flat, though toys posted double-digit growth, and the company completed 56 Babies R Us shop-in-shop expansions in June. Sephora at Kohl’s sales declined 4%, with fragrance and haircare outperforming while makeup and skincare faced headwinds. New brand launches are scheduled for the holiday season, including Khloé Kardashian’s line and Givenchy’s beauty products.
