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Kohl's Posts Narrower-Than-Expected Q1 Loss, Net Sales Down 1.7% Y/Y
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Key Takeaways
Kohl's Q1 loss of 13 cents per share beat estimates despite a 1.7% sales decline.
KSS gross margin rose 4 bps to 39.9% on higher proprietary brand penetration.
Kohl's expects FY26 sales to range from down 2% to flat with EPS of $1.00-$1.60.
Kohl's Corporation (KSS - Free Report) reported first-quarter fiscal 2026 loss per share of 13 cents, which was narrower than the Zacks Consensus Estimate of a loss of 18 cents. The bottom line remained flat compared with the prior year.
Total revenues were $3,167 million, down 2% from the prior-year quarter’s $3,233 million. The top line beat the Zacks Consensus Estimate of $3,161 million. The company’s net sales fell 1.7% to $2,998 million, while other revenues fell 8.2% to $169 million. Comparable sales were down 1.1% year over year. We expected comparable sales to decrease 1.8%.
Kohl's Corporation Price, Consensus and EPS Surprise
This Zacks Rank #2 (Buy) company’s gross margin increased 4 basis points (bps) year over year to 39.9%. The improvement was primarily driven by higher penetration of proprietary brands. However, the improvement was partially offset by increased shipping costs resulting from greater digital sales penetration.
SG&A expenses dropped 1.6% to $1,145 million, reflecting combined savings in credit and corporate expenses. As a percentage of total revenues, SG&A expenses increased 15 bps to 36.2%. We anticipated SG&A expenses, as a percentage of net sales, to be 35.9%.
Operating income decreased to $46 million, down from $60 million in the prior year. Operating margin was 1.4%, reflecting a decrease of 41 bps year over year.
KSS’ Financial Health Snapshot & Other Updates
Kohl's ended the quarter with cash and cash equivalents of $429 million and shareholders’ equity of $4,024 million.
Net cash used in operating activities was $74 million for the three months ending May 2, 2026. Management expects capital expenditures in the range of $350 million to $400 million for fiscal 2026.
On May 20, 2026, Kohl’s declared a quarterly cash dividend of 12.50 cents per share, payable June 24, to its shareholders of record as of June 10.
What to Expect From KSS in FY26?
For fiscal 2026, Kohl’s expects net sales and comparable sales to decline 2% to flat, with an adjusted operating margin of 2.8% to 3.4% and adjusted earnings per share in the range of $1.00 to $1.60.
The company’s shares have lost 16.5% in the past three months against the industry’s growth of 0.5%.
The Zacks Consensus Estimate for Five Below’s current fiscal-year sales and earnings calls for growth of 11.4% and 19.5%, respectively, from the year-ago reported numbers. FIVE delivered a trailing four-quarter earnings surprise of 63.4%, on average.
Ross Stores, Inc. (ROST - Free Report) , operates off-price retail apparel and home fashion stores under the Ross Dress for Less and dd's DISCOUNTS brands in the United States. It carries a Zacks Rank #2 at present. ROST delivered a trailing four-quarter earnings surprise of 10.2%, on average.
The Zacks Consensus Estimate for Ross Stores’ current fiscal-year sales and earnings implies an increase of 8.2% and 15.6%, respectively, from the prior-year levels.
Dillard's, Inc. (DDS - Free Report) operates retail department stores in the southeastern, southwestern, and midwestern areas of the United States. It carries a Zacks Rank #2 at present. DDS delivered a trailing four-quarter average earnings surprise of 27.9%.
The Zacks Consensus Estimate for Dillard's current fiscal-year sales and earnings implies an increase of 1.9% and 0.1%, respectively, from the prior-year levels.
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Kohl's Posts Narrower-Than-Expected Q1 Loss, Net Sales Down 1.7% Y/Y
Key Takeaways
Kohl's Corporation (KSS - Free Report) reported first-quarter fiscal 2026 loss per share of 13 cents, which was narrower than the Zacks Consensus Estimate of a loss of 18 cents. The bottom line remained flat compared with the prior year.
Total revenues were $3,167 million, down 2% from the prior-year quarter’s $3,233 million. The top line beat the Zacks Consensus Estimate of $3,161 million. The company’s net sales fell 1.7% to $2,998 million, while other revenues fell 8.2% to $169 million. Comparable sales were down 1.1% year over year. We expected comparable sales to decrease 1.8%.
Kohl's Corporation Price, Consensus and EPS Surprise
Kohl's Corporation price-consensus-eps-surprise-chart | Kohl's Corporation Quote
Kohl’s Quarterly Margin Highlights
This Zacks Rank #2 (Buy) company’s gross margin increased 4 basis points (bps) year over year to 39.9%. The improvement was primarily driven by higher penetration of proprietary brands. However, the improvement was partially offset by increased shipping costs resulting from greater digital sales penetration.
SG&A expenses dropped 1.6% to $1,145 million, reflecting combined savings in credit and corporate expenses. As a percentage of total revenues, SG&A expenses increased 15 bps to 36.2%. We anticipated SG&A expenses, as a percentage of net sales, to be 35.9%.
Operating income decreased to $46 million, down from $60 million in the prior year. Operating margin was 1.4%, reflecting a decrease of 41 bps year over year.
KSS’ Financial Health Snapshot & Other Updates
Kohl's ended the quarter with cash and cash equivalents of $429 million and shareholders’ equity of $4,024 million.
Net cash used in operating activities was $74 million for the three months ending May 2, 2026. Management expects capital expenditures in the range of $350 million to $400 million for fiscal 2026.
On May 20, 2026, Kohl’s declared a quarterly cash dividend of 12.50 cents per share, payable June 24, to its shareholders of record as of June 10.
What to Expect From KSS in FY26?
For fiscal 2026, Kohl’s expects net sales and comparable sales to decline 2% to flat, with an adjusted operating margin of 2.8% to 3.4% and adjusted earnings per share in the range of $1.00 to $1.60.
The company’s shares have lost 16.5% in the past three months against the industry’s growth of 0.5%.
Image Source: Zacks Investment Research
Other Stocks to Consider
Five Below, Inc. (FIVE - Free Report) operates as a specialty value retailer in the United States and currently holds a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Five Below’s current fiscal-year sales and earnings calls for growth of 11.4% and 19.5%, respectively, from the year-ago reported numbers. FIVE delivered a trailing four-quarter earnings surprise of 63.4%, on average.
Ross Stores, Inc. (ROST - Free Report) , operates off-price retail apparel and home fashion stores under the Ross Dress for Less and dd's DISCOUNTS brands in the United States. It carries a Zacks Rank #2 at present. ROST delivered a trailing four-quarter earnings surprise of 10.2%, on average.
The Zacks Consensus Estimate for Ross Stores’ current fiscal-year sales and earnings implies an increase of 8.2% and 15.6%, respectively, from the prior-year levels.
Dillard's, Inc. (DDS - Free Report) operates retail department stores in the southeastern, southwestern, and midwestern areas of the United States. It carries a Zacks Rank #2 at present. DDS delivered a trailing four-quarter average earnings surprise of 27.9%.
The Zacks Consensus Estimate for Dillard's current fiscal-year sales and earnings implies an increase of 1.9% and 0.1%, respectively, from the prior-year levels.