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Key Takeaways
- Adjusted earnings per share reached $1.28 in Q2, crushing analyst consensus of 58 cents by more than double
- Revenue declined 0.9% year-over-year to $3.3 billion, with comparable store sales matching that decline
- Full-year EPS outlook increased to $1.80-$2.40 range from previous $1.00-$1.60 forecast
- Company benefited from approximately $150 million in tariff rebates during the quarter and will resume buybacks up to $100 million
- Shares plunged more than 6% in pre-market hours despite the significant earnings outperformance
Despite crushing Wall Street expectations on the bottom line, Kohl’s faced a harsh reception from investors Tuesday as shares tumbled over 6% before the opening bell. The department store chain reported that revenue and comparable store sales both contracted 0.9% from the prior year, finishing at $3.3 billion for the quarter that concluded August 1.
On the profitability front, adjusted EPS landed at $1.28—significantly outperforming the Street’s 58-cent projection. Net income registered $151 million, representing a modest decline from the $153 million posted in the same period last year.
The revenue contraction extends a persistent pattern that CEO Michael Bender has been attempting to halt since assuming leadership in May 2025. While Bender recognized there remains “critical work ahead,” he highlighted what the company views as incremental improvements in comparable sales momentum.
A significant tailwind came from approximately $150 million in tariff rebates the company collected during the three-month period. This unexpected benefit provided the financial cushion to upgrade full-year projections.
The retailer now anticipates full-year net sales and comparable sales will range from flat to down 1.5%, an improvement from the previous outlook of flat to down 2%. Adjusted earnings per share guidance jumped to $1.80-$2.40 from the earlier $1.00-$1.60 range. The Street had been modeling $1.45.
Buyback Program Resumes
Kohl’s revealed plans to resume stock repurchases, allocating up to $100 million under an existing $3 billion authorization that has been dormant since May 2020.
Over the last half-year, the company repurchased $113 million of its unsecured bonds at a $15 million discount, building on $87 million in debt buybacks from the previous year.
Analysts Were Already Pessimistic
Wall Street sentiment entering the earnings release skewed decidedly negative. JP Morgan analyst Matthew Boss kept his Underweight rating intact with a $17 price objective. Both Morgan Stanley and Bank of America similarly maintained bearish stances on the shares.
Options trading patterns the day before earnings revealed put contracts dominating calls by approximately a 4-to-1 ratio, with concentrated activity in short-dated strikes considerably below the prevailing share price. Market participants were clearly positioning for disappointment.
Compounding investor concerns, the retailer created a new Chief Customer Officer position while its Chief Marketing Officer exited, prompting questions about executive stability during a crucial transformation phase.
Broader equity markets provided no cushion. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all traded relatively unchanged on the day, indicating the selling pressure in KSS was purely company-driven.
The retailer’s primary customer demographic of middle- and lower-income consumers remains under strain from constrained discretionary budgets. With shares now trading much closer to the 52-week floor of $11.38 than the 52-week ceiling of $25.22, market participants remain unconvinced the turnaround strategy is generating meaningful momentum.
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