The headline quarter beat on EPS, but sales missed expectations. Published pre-release estimates were roughly $0.58 of EPS and $3.4 billion of revenue; Kohl’s delivered $1.28 of diluted EPS on $3.318 billion of revenue.
| Metric | Q2 FY2026 | Q2 FY2025 / expectation |
|---|---|---|
| Net sales | $3.318B (Financial Highlights) | $3.347B prior year; ~$3.4B consensus |
| Comparable sales | -0.9% (Financial Highlights) | -0.9% prior year comparison |
| Gross margin | 43.0% (Financial Highlights) | 39.9% prior year |
| Operating income | $261M (Income Statement) | $279M prior year |
| Diluted EPS | $1.28 (Income Statement) | $1.35 prior year; ~$0.58 consensus |
| Operating cash flow | $552M (Financial Highlights) | $598M prior year |
| FY2026 adjusted EPS guidance | $1.80-$2.40 (2026 Financial and Capital Allocation Outlook) | Previously $1.00-$1.60 |
The EPS beat was heavily helped by a one-time tariff benefit. Kohl’s received approximately $150 million of tariff refunds, with about $100 million flowing through gross margin. (Financial Highlights) That makes the $1.28 EPS result materially less representative of recurring retail improvement than the headline suggests.
Underlying sales momentum improved only modestly, not decisively. Net sales and comparable sales both fell 0.9%, while gross margin expanded 305 basis points and SG&A declined 0.9%. (Second Quarter 2026 Results) The margin progress is real, but operating income still declined to $261 million from $279 million and operating cash flow fell to $552 million from $598 million (Income Statement; Cash Flow statement).
The guidance raise is the clearest positive surprise, but it largely incorporates the refund windfall. Kohl’s lifted adjusted EPS guidance from the prior $1.00-$1.60 range to $1.80-$2.40 and explicitly included the second-quarter tariff refunds. 〔0〕 (2026 Financial and Capital Allocation Outlook) The new range is above the prior framework, but the quality of the increase is weaker because the sales outlook remains a decline of 1.5% to flat.
Capital returns resumed, signaling improved liquidity but not a turnaround by itself. Kohl’s plans up to $100 million of 2026 share repurchases under its existing $3 billion authorization. (2026 Financial and Capital Allocation Outlook) Cash rose to $821 million and long-term debt fell $195 million year over year (Balance Sheets), supporting the capital-allocation shift. Net: a narrow earnings beat and guidance raise versus expectations, tempered by declining sales and unusually large tariff-related help.
Read the original 8-K on SEC EDGAR ↗