KOHLS Corp
For the period ended Aug 1, 2026. Filed Sep 3, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Aug 1, 2026 · Filed Sep 3, 2026
KSS$23.04-3.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-05-02; filed 2026-06-04.
0001193125-26-257402
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-08-01; filed 2026-09-03.
0001193125-26-381893
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 81 previous paragraphs and 88 current paragraphs.
44 unchanged; 29 reworded; 15 added; 8 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 11 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
Net income was $151 million, or $1.28 per diluted share. This compares to net income of $153 million, or $1.35 per diluted share in the prior year. In the prior year, adjusted non-GAAP net income was $64 million, or $0.56 per adjusted diluted share.(a)
Current report
Operating cash flow was $552 million compared to $598 million in the prior year.
Current report
Tariff refunds of approximately $150 million were received in the quarter of which approximately $100 million was recognized within gross margin.
Current report
(a)
Current report
Non-GAAP financial measures. Please see the “GAAP to Non-GAAP Reconciliation” for a reconciliation of adjusted operating income to operating income, adjusted net income to net income, and adjusted diluted earnings per share to diluted earnings per share.
Current report
Net sales decreased 0.9% in the second quarter of 2026 and 1.2% year to date 2026.
Current report
During the second quarter, SG&A expenses decreased $11 million, or 0.9%, to $1.2 billion. As a percentage of revenue, SG&A was flat to last year. Year to date 2026, SG&A expenses decreased $30 million, or 1.3%, to $2.3 billion. As a percentage of revenue, SG&A deleveraged by 6 basis points. The decreases for both periods were driven by expense savings across stores, corporate, and credit, which are included in corporate and other costs.
Current report
The decreases in depreciation and amortization in the second quarter and year to date 2026 were driven by lower capital spend.
Current report
In the second quarter of 2025, we recognized $11 million of Impairments, store closing, and other costs. Included in this amount was $11 million of non-cash charges related to asset impairments, $7 million of severance, and $4 million of other costs primarily related to the closure of our Monroe, Ohio E-commerce Fulfillment Center. We also reversed $11 million of other exit costs initially recognized in the fourth quarter of 2024, related to the closure of our San Bernardino, California E-commerce Fulfillment Center and 27 underperforming stores due to favorable landlord negotiations.
Current report
Also in the second quarter of 2025, Kohl’s entered into a settlement agreement to resolve a credit card interchange fee lawsuit in which we were a plaintiff. We recorded a gain, net of legal fees, and received cash of $129 million.
Current report
The effective tax rate for the second quarter of 2026 was 23.3% compared to 23.8% for the second quarter of 2025. Year to date, the tax rate was 24.1% and 25.0% for 2026 and 2025, respectively.
Current report
GAAP to Non-GAAP Reconciliation
Current report
In addition to reporting our financial results in accordance with U.S. GAAP, this Quarterly Report on Form 10-Q contains certain non-GAAP financial results, including adjusted operating income, adjusted net income, and adjusted diluted earnings per share for the prior year. These adjusted results exclude the gains, impairments, other costs, and reversals associated with the closing of 27 underperforming stores, our San Bernardino, California and Monroe, Ohio E-commerce Fulfillment Centers and settlement of a credit card interchange fee lawsuit, as we believe such items are not representative of our normal business activity. We believe these non-GAAP measures are useful, as they are more representative of our core business, enhance comparability across reporting periods and to industry peers, and align with the measures used by management to evaluate the Company’s performance. The adjusted, non-GAAP results are provided and should be evaluated in addition to, and not as an alternative for, our results reported in accordance with GAAP. Shown in the following table is a reconciliation of each non-GAAP measure referenced throughout this report to the most comparable GAAP measure. No adjustments were made to our results for the first half of fiscal 2026 and therefore these results are not included in the following table. Operating income was $261 million and $307 million in the second quarter and first half of 2026. Net income was $151 million, or $1.28 per diluted share, and $137 million, or $1.18 per diluted share, in the second quarter and first half of 2026.
Current report
During the second quarter of 2026, S&P upgraded their outlook to stable.
Current report
In the second quarter of 2025, we issued $360 million aggregate principal amount of 10.000% senior secured notes due 2030 and received proceeds of $357 million, net of the debt discount. Also in the second quarter of 2025, $353 million in aggregate principal amount of our 4.25% notes matured and were repaid.
Removed paragraphs (8)
Previous report
Net loss was $14 million, or ($0.13) per diluted share. This compares to net loss of $15 million, or ($0.13) per diluted share in the prior year.
Previous report
Operating cash flow was a use of $74 million.
Previous report
Borrowings under revolving credit facility were $0, a decrease of $545 million year-over-year.
Previous report
Net sales decreased 1.7% in the first quarter of 2026 compared to the first quarter of 2025.
Previous report
SG&A expenses decreased $19 million, or 1.6%, to $1.1 billion. As a percentage of revenue, SG&A deleveraged by 15 basis points. The decrease in SG&A expenses was driven by lower corporate and other costs, primarily from reduced credit expenses.
Previous report
Depreciation and amortization was $174 million, relatively flat to the first quarter of 2025.
Previous report
In both periods, the effective tax rate results in a net benefit for income taxes on a pre-tax loss. The impact of the 2026 and 2025 net unfavorable tax items, when compared to a pre-tax loss, results in decreasing the tax rate from the statutory rate.
Previous report
During the first quarter of 2026, Moody's revised their outlook to positive.
Reworded paragraphs (29)
Previous wording
For purposes of the following discussion, unless noted, all references to "the quarter” and “the first quarter” are for the three fiscal months (13 weeks) ended May 2, 2026 or May 3, 2025.
Current wording
For purposes of the following discussion, unless noted, all references to "the quarter” and “the second quarter” are for the three fiscal months (13 weeks) ended August 1, 2026 or August 2, 2025. References to "year to date" and "first half" are for the six fiscal months (26 weeks) ended August 1, 2026 or August 2, 2025. References to "first quarter" are for the three fiscal months (13 weeks) ended May 2, 2026 or May 3, 2025.
Previous wording
This Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "believes," "anticipates," "plans," "may," "intends," "will," "should," "expects," and similar expressions are intended to identify forward-looking statements. Forward-looking statements include certain statements under Management's Discussion and Analysis and may include comments about our future sales or financial performance and our plans, performance and other objectives, expectations or intentions, such as statements regarding our liquidity, debt service requirements, planned capital expenditures, future store initiatives, adequacy of capital resources and reserves, and the impact of macroeconomic events, including inflation, consumer behavior, and changes in global trade policies, such as tariffs, and our response to such events. Forward-looking statements are based on management’s then-current views and assumptions and, as a result, are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Any such forward-looking statements are qualified by the important risk factors, described in Part I Item 1A of our 2025 Form 10-K and in Part II Item 1A of this Form 10-Q, or disclosed from time to time in our filings with the SEC, that could cause actual results to differ materially from those predicted by the forward-looking statements. Forward-looking statements relate to the date initially made, and we undertake no obligation to update them. Certain amounts set forth below may not foot or crossfoot due to rounding.
Current wording
This Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "believes," "anticipates," "plans," "may," "intends," "will," "should," "expects," and similar expressions are intended to identify forward-looking statements. Forward-looking statements include certain statements under Management's Discussion and Analysis and may include comments about our future sales or financial performance and our plans, performance and other objectives, expectations or intentions, such as statements regarding our liquidity, debt service requirements, planned capital expenditures, future store initiatives, adequacy of capital resources and reserves, and the impact of macroeconomic events, including inflation, consumer behavior, and changes in global trade policies, such as tariffs, and our response to such events. Forward-looking statements are based on management’s then-current views and assumptions and, as a result, are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Any such forward-looking statements are qualified by the important risk factors, described in Part I Item 1A of our 2025 Form 10-K, in Part II Item 1A of our Quarterly Reports on Form 10-Q for the first and second quarters of 2026, or disclosed from time to time in our filings with the SEC, that could cause actual results to differ materially from those predicted by the forward-looking statements. Forward-looking statements relate to the date initially made, and we undertake no obligation to update them. Certain amounts set forth below may not foot or crossfoot due to rounding.
Previous wording
Key financial results for the first quarter include:
Current wording
Key financial results for the second quarter include:
Previous wording
Net sales decreased 1.7%, to $3.0 billion, with comparable sales down 1.1%.
Current wording
Net sales decreased 0.9%, to $3.3 billion, with comparable sales down 0.9%.
Previous wording
Gross margin as a percentage of net sales was 39.9%, an increase of 4 basis points year-over-year.
Current wording
Gross margin as a percentage of net sales was 43.0%, an increase of 305 basis points year-over-year.
Previous wording
Selling, general, and administrative ("SG&A") expenses decreased 1.6%, to $1.1 billion. As a percentage of total revenue, SG&A expenses were 36.2%, an increase of 15 basis points year-over-year.
Current wording
Selling, general, and administrative ("SG&A") expenses decreased 0.9%, to $1.2 billion. As a percentage of total revenue, SG&A expenses were 33.8%, consistent with the prior year.
Previous wording
Operating income was $46 million compared to $60 million in the prior year. As a percentage of total revenue, operating income was 1.4%, a decrease of 41 basis points year-over-year.
Current wording
Operating income was $261 million compared to $279 million in the prior year. As a percentage of total revenue, operating income was 7.4%, a decrease of 45 basis points year-over-year. In the prior year, adjusted non-GAAP operating income was $161 million and 4.6% of total revenue.(a)
Previous wording
Inventory was $2.9 billion, a decrease of 8% year-over-year.
Current wording
Inventory was $2.9 billion, a decrease of 3% year-over-year.
Previous wording
Kohl's remains committed to driving long-term shareholder value by providing our customers with great product, great value, and a great experience. We have three key initiatives to achieve this: we offer a curated, balanced assortment that fulfills needs across all customers, we are reestablishing Kohl’s as a leader in value and quality, and we are delivering a frictionless experience to customers across our omnichannel platforms.
Current wording
Kohl's remains committed to driving long-term shareholder value by providing our customers with great product, great value, and a great experience. We have three key initiatives to achieve this: we offer a curated and more balanced assortment that fulfills needs of all customers, we are reestablishing Kohl’s as a leader in value and quality, and we are delivering a frictionless shopping experience across our omnichannel platforms.
Previous wording
The decrease in the first quarter was driven by a decrease in transaction volume of approximately 4%, offset by an increase in average transaction value of approximately 2%.
Current wording
The decrease in the second quarter was driven by an equal decrease in average transaction value and in transaction volume. The decrease year to date was driven by a 2% decrease in transaction volume offset by an increase in average transaction value of approximately 1%.
Previous wording
In the first quarter, Women's, Home, Accessories, and Children's net sales performed better than the total company average.
Current wording
In the second quarter and year to date 2026, Home, Accessories, and Children's net sales performed better than the total Company average. Year to date 2026, Women's net sales also performed better than the total Company average.
Previous wording
Comparable sales decreased 1.1%. Comparable sales is a measure that highlights the performance of our stores and digital channel by measuring the change in sales for a period over the comparable, prior-year period of equivalent length. Comparable sales includes all store and digital sales, except sales from stores open less than twelve months, stores that have been closed, and stores that have been relocated where square footage has changed by more than 10%.
Current wording
Comparable sales decreased 0.9% in the second quarter of 2026 and 1.0% year to date 2026. Comparable sales is a measure that highlights the performance of our stores and digital channel by measuring the change in sales for a period over the comparable, prior-year period of equivalent length. Comparable sales includes all store and digital sales, except sales from stores open less than twelve months, stores that have been closed, and stores that have been relocated where square footage has changed by more than 10%.
Previous wording
Digital sales increased 4.0% and digital penetration represented 26% of net sales compared to 24% in the first quarter of 2025. We measure the change in digital sales by including all sales initiated online or through mobile applications, including omnichannel transactions which are fulfilled through our stores. We measure digital penetration as digital sales over net sales. These amounts do not take into consideration fulfillment node, digital returns processed in stores, and coupon behaviors.
Current wording
Digital sales increased 2.8% in the second quarter of 2026 and 3.4% year to date 2026. Digital penetration represented 27% of net sales in the second quarter of 2026 and 26% year to date 2026, compared to 26% in the second quarter of 2025 and 25% year to date 2025. We measure the change in digital sales by including all sales initiated online or through mobile applications, including omnichannel transactions which are fulfilled through our stores. We measure digital penetration as digital sales over net sales. These amounts do not take into consideration fulfillment node, digital returns processed in stores, and coupon behaviors.
Previous wording
Other revenue includes revenue from credit card operations, third-party advertising on our website, unused gift cards and merchandise return cards (breakage), and other non-merchandise revenue.
Current wording
Other revenue includes revenue from credit card operations, third-party advertising on our website, unused gift cards and merchandise return cards (breakage), commissions from our third-party digital marketplace, and other non-merchandise revenue.
Previous wording
Other revenue decreased $15 million due to lower revenue from our credit card operations. This was driven by lower late fees and finance charges partially offset by lower write-off activity.
Current wording
Other revenue decreased $2 million in the second quarter of 2026 and $17 million year to date 2026, due to lower revenue from our credit card operations. This was driven by lower late fees and finance charges partially offset by lower write-off activity.
Previous wording
Gross margin is calculated as net sales less cost of merchandise sold. For the first quarter of 2026, gross margin was 39.9% of net sales, an increase of 4 basis points to last year. The increase was caused by merchandise mix with increased proprietary brand penetration, partially offset by elevated shipping costs driven by our digital sales increase of 4% year over year.
Current wording
Gross margin is calculated as net sales less cost of merchandise sold. For the second quarter of 2026, gross margin was 43.0% of net sales and 41.5% of net sales year to date 2026, an increase of 305 and 162 basis points to last year, respectively. The increase was driven by tariff refunds, partially offset by repayments to vendors and investments to drive value for our customers.
Previous wording
Net interest expense decreased due to a gain on extinguishment of debt related to the open market repurchases of long term debt completed in the first quarter of 2026 and no outstanding balance on the revolving credit facility. The reductions were partially offset by interest on our 2030 notes, issued in the second quarter of 2025.
Current wording
Net interest expense decreased in the first half of 2026 due to gains on extinguishment of debt recognized in net interest expense and no outstanding balance on the revolving credit facility. The gains on extinguishment of debt resulted from open market purchases of long term debt, totaling $6 million for the second quarter and $15 million year to date.
Previous wording
We expect that our operations will continue to be influenced by general economic conditions, including food, fuel and energy prices, higher unemployment, wage inflation, and costs to source our merchandise, including tariffs. During 2025, the U.S. government utilized the IEEPA to impose additional tariffs on a broad range of imports, including certain consumer goods. While these actions did not have a material impact on our 2025 and year-to-date 2026 results, the global trade environment remains fluid. On February 20, 2026, the U.S. Supreme Court issued a ruling in Learning Resources, Inc. v. Trump striking down certain tariffs previously imposed under IEEPA. While this ruling may lead to potential refunds for duties paid during 2025 and the first quarter of 2026, the availability, timing, and amount of such refunds remain uncertain and subject to further legal and administrative developments. Following this decision, the U.S. administration invoked Section 122 of the Trade Act of 1974 to impose new tariffs on imports, effective February 24, 2026. These Section 122 tariffs are currently subject to legal challenge; in May 2026, the U.S. Court of International Trade issued a ruling finding the tariffs unlawful, although this ruling is currently stayed pending appeal. We continue to pay these duties while monitoring the legal developments. Further tariff-related actions may increase merchandise costs, affect merchandise availability, and impact our operational results.
Current wording
We expect that our operations will continue to be influenced by general economic conditions, including food, fuel and energy prices, unemployment levels, wage inflation, and costs to source our merchandise, including tariffs. During 2025, the U.S. government utilized the IEEPA to impose additional tariffs on a broad range of imports, including certain consumer goods. On February 20, 2026, the U.S. Supreme Court issued a ruling in Learning Resources, Inc. v. Trump striking down certain tariffs previously imposed under IEEPA. Following this decision, the U.S. administration invoked Section 122 of the Trade Act of 1974 to impose new tariffs on imports, effective February 24, 2026. Although the U.S. Court of International Trade issued a ruling finding the Section 122 tariffs unlawful in May 2026, duty collections continued under a judicial stay until the 150-day statutory window expired on July 24, 2026. The administration subsequently transitioned to replacement trade actions, implementing new tariffs under authorities such as Section 301. We continue to pay applicable duties under these authorities, while monitoring the legal developments. The global trade environment remains fluid and further tariff-related actions may increase merchandise costs, affect merchandise availability, and impact our operational results.
Previous wording
The Company paid approximately $190 million in IEEPA tariffs between February 2025 and February 2026. We submitted claims seeking approximately $140 million in refunds of previously paid IEEPA tariffs as part of the Phase 1 CAPE tariff refunds. We continue to monitor developments regarding subsequent administrative phases for our remaining entries.
Current wording
The Company paid approximately $190 million in IEEPA tariffs during fiscal 2025 and February 2026. We submitted claims seeking approximately $185 million in refunds of previously paid IEEPA tariffs as part of the Phase 1 and Phase 2 CAPE tariff refunds. As of August 1, 2026, the Company has received approximately $150 million in refund payments. The Company’s remaining IEEPA refund claims continue to be accounted for as gain contingencies. Uncertainty remains regarding the timing, amount and ultimate receipt of any further refunds.
Previous wording
We will continue to invest in the business, as we plan to invest approximately $350 to $400 million in capital expenditures in 2026 towards our strategic priorities. On May 20, 2026, our Board of Directors declared a quarterly cash dividend of $0.125 per share. The dividend will be paid on June 24, 2026 to all shareholders of record at the close of business on June 10, 2026. During the first quarter of 2026, we reduced our outstanding debt by $50 million aggregate principal through repurchases of various notes on the open market. We are not currently planning any share repurchases.
Current wording
We will continue to invest in the business, as we plan to invest approximately $350 to $400 million in capital expenditures in 2026 towards our strategic priorities. On August 18, 2026, our Board of Directors declared a quarterly cash dividend of $0.125 per share. The dividend will be paid on September 23, 2026, to all shareholders of record at the close of business on September 9, 2026. During the second quarter of 2026, we reduced our outstanding debt by $63 million aggregate principal through repurchases of various notes on the open market. Year to date, we have reduced our outstanding debt by $113 million through repurchases. Under our existing $3 billion board authorization, we are resuming our share repurchase program with plans to buy back approximately $100 million in stock in 2026.
Previous wording
Our period-end Cash and cash equivalents balance increased to $429 million from $153 million in the first quarter of 2025. Our Cash and cash equivalents balance includes short-term investments of $273 million and $7 million as of May 2, 2026 and May 3, 2025, respectively. Our investment policy is designed to preserve principal and liquidity of our short-term investments. This policy allows investments in large money market funds or in highly rated direct short-term instruments. We also place dollar limits on our investments in individual funds or instruments.
Current wording
Our period-end cash and cash equivalents balance increased to $821 million from $174 million in the second quarter of 2025. Our Cash and cash equivalents balance includes short-term investments of $682 million and $17 million as of August 1, 2026, and August 2, 2025, respectively. Our investment policy is designed to preserve principal and liquidity of our short-term investments. This policy allows investments in large money market funds or in highly rated direct short-term instruments. We also place dollar limits on our investments in individual funds or instruments.
Previous wording
Operating activities used $74 million of cash in the first quarter of 2026 compared to $92 million in the first quarter of 2025. The decrease in cash used in operating activities is due to the timing of payments and inventory receipts year over year.
Current wording
Operating activities provided $478 million of cash in the first half of 2026 compared to $506 million in the first half of 2025. The decrease in cash provided by operating activities is primarily driven by timing of payments.
Previous wording
Investing activities used $84 million in the first quarter of 2026 compared to $108 million in the first quarter of 2025. The decrease in cash used in investing activities was primarily driven by our reduced capital expenditure plans for fiscal 2026.
Current wording
Investing activities used $153 million in the first half of 2026 compared to $179 million in the first half of 2025. The decrease in cash used in investing activities was primarily driven by our reduced capital expenditure plans for fiscal 2026.
Previous wording
Financing activities used $87 million of cash in the first quarter of 2026 and generated $219 million of cash in the first quarter of 2025.
Current wording
Financing activities used $178 million of cash in the first half of 2026 compared to $287 million of cash in the first half of 2025.
Previous wording
Cash dividend payments were $14 million ($0.125 per share) in both the first quarter of 2026 and the first quarter of 2025.
Current wording
Cash dividend payments were $28 million ($0.25 per share) in both the first half of 2026 and the first half of 2025.
Previous wording
In the first quarter of 2026, we had no net activity on our $1.5 billion credit facility, compared to net borrowings of $255 million in the first quarter of 2025. Borrowings outstanding under the revolving credit facility, recorded as short-term debt, were $0 as of May 2, 2026, and $545 million as of May 3, 2025.
Current wording
In the first half of 2026, we had no net activity on our $1.5 billion credit facility, compared to net repayments of $215 million in the first half of 2025. Borrowings outstanding under the revolving credit facility, recorded as short-term debt, were $0 as of August 1, 2026, and $75 million as of August 2, 2025.
Previous wording
Also in the first quarter of 2026, we reduced our outstanding debt by $50 million aggregate principal through repurchases of various notes on the open market.
Current wording
Also in the first half of 2026, we reduced our outstanding debt by $113 million aggregate principal through repurchases of various notes on the open market.
Previous wording
There was no cash used for treasury stock purchases in the first quarter of 2026 or 2025. Share repurchases are discretionary in nature. The timing and amount of repurchases are based upon available cash balances, our stock price, and other factors. As we continue to solidify our balance sheet and improve our business results we will look at resuming share repurchases in the future.
Current wording
There was no cash used for treasury stock purchases in the first half of 2026 or 2025. Share repurchases are discretionary in nature. The timing and amount of repurchases are based upon available cash balances, our stock price, and other factors. Under our existing $3 billion board authorization, we are resuming our share repurchase program with plans to buy back approximately $100 million in stock in 2026.
Previous wording
The increases in our working capital and current ratio are driven by decreased borrowings under the revolving credit facility, the repayment of $353 million of our 4.25% notes that matured following the first quarter of 2025, and an increase in cash and cash equivalents.
Current wording
The increases in our working capital and current ratio are driven by an increase in cash and cash equivalents.