Kohl's Corp. reported adjusted earnings per share of $1.28 for the second quarter, exceeding analyst expectations of $0.57, though revenue of $3.32 billion fell short of the $3.4 billion estimate and declined 0.9% year-over-year. Comparable sales also decreased by 0.9% for the quarter, while gross margin expanded by 305 basis points to 43.0%.
Net income for the period totaled $151 million, down from $167 million in the prior-year quarter, with operating income at $261 million compared to $279 million a year earlier. Inventory levels decreased 3% year-over-year to $2.9 billion, and tariff refunds contributed approximately $100 million to gross margin, with total refunds received reaching roughly $150 million during the quarter.
Despite the earnings beat, Kohl's shares fell more than 8% in premarket trading on Wednesday, reversing an initial upward move. The company also raised its adjusted EPS guidance for fiscal 2026 to a range of $1.80 to $2.40, with the midpoint of $2.10 exceeding the analyst consensus of $1.43. However, management expects net sales and comparable sales to decline between 1.5% and flat for the year.
For the first six months of fiscal 2026, net sales decreased 1.2% to $6.3 billion, while adjusted EPS rose to $1.18 from $0.44 in the prior-year period. Operating cash flow totaled $478 million, down from $506 million a year earlier. Kohl's also announced plans to restart its share repurchase program in 2026, with up to $100 million earmarked for buybacks.
CEO Michael Bender stated that the company remains confident in its strategic initiatives, noting that the second-quarter results reflect progress in improving comparable sales trends.
