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Why Is Kohl's (KSS) Down 5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Kohl's (KSS - Free Report) . Shares have lost about 5% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Kohl's due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
KSS Q2 Earnings Beat Estimates on Margin Gains, Outlook Raised
Kohl's Corporation posted adjusted earnings of $1.28 per share in the second quarter of fiscal 2026, up 128.6% from 56 cents a year ago. The figure beat the Zacks Consensus Estimate of 55 cents per share.
Total revenues fell 0.9% year over year to $3,515 million and narrowly missed the consensus estimate of $3,516 million. The company’s net sales fell 0.9% to $3,318 million, while other revenues fell 1% to $197 million. Comparable sales were down 0.9% year over year. We expected comparable sales to decrease 0.9%.
Kohl’s Quarterly Margin Highlights
The gross margin expanded 305 basis points year over year to 43%. Kohl's received about $150 million of IEEPA tariff refunds during the quarter, with roughly $100 million benefiting cost of merchandise sold. A portion of the refund was also recorded as a reduction of inventory, shared with vendors and invested to deliver greater value to customers.
SG&A expenses declined 0.9% to $1,188 million and remained flat at 33.8% of total revenues. We anticipated SG&A expenses to be 33.7% of total revenues. Operating income decreased to $261 million, down from $279 million in the prior year. Operating margin was 7.4%, reflecting a decrease of 45 bps year over year.
KSS’ Financial Health Snapshot & Other Updates
KSS ended the quarter with $821 million in cash and cash equivalents, up from $174 million a year earlier. Merchandise inventories declined 3% to $2,913 million, while long-term debt fell to $1,325 million from $1,520 million. The company also had no borrowings under its revolving credit facility at quarter-end.
For the first six months, net cash provided by operating activities was $478 million compared with $506 million a year ago. Free cash flow rose to $332 million from $306 million, while adjusted free cash flow increased to $288 million from $270 million.
The company is restarting share repurchases of up to $100 million in 2026 under its existing $3 billion authorization. On Aug. 18, 2026, Kohl’s declared a quarterly cash dividend of 12.50 cents per share, payable on Sept. 23, to its shareholders of record as of Sept. 9.
What to Expect From KSS in FY26?
Kohl's now expects fiscal 2026 net sales and comparable sales to range from flat to down 1.5%, compared with its prior outlook for a decline of up to 2%. Adjusted operating margin is projected at 3.5-4%, up from the earlier forecast of 2.8-3.4%, while adjusted earnings are forecasted at $1.80-$2.40 per share, compared with the previous outlook of a $1.00-$1.60 range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -77.78% due to these changes.
VGM Scores
Currently, Kohl's has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock has a grade of A on the value side, putting it in the top quintile for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Kohl's has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Kohl's belongs to the Zacks Retail - Regional Department Stores industry. Another stock from the same industry, Dillard's (DDS - Free Report) , has gained 3.3% over the past month. More than a month has passed since the company reported results for the quarter ended July 2026.
Dillard's reported revenues of $1.51 billion in the last reported quarter, representing a year-over-year change of -0.4%. EPS of $6.25 for the same period compares with $4.66 a year ago.
Dillard's is expected to post earnings of $7.80 per share for the current quarter, representing a year-over-year change of -6.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.1%.
Dillard's has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
View the Zacks #1 Rank List
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Why Is Kohl's (KSS) Down 5% Since Last Earnings Report?
It has been about a month since the last earnings report for Kohl's (KSS - Free Report) . Shares have lost about 5% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Kohl's due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
KSS Q2 Earnings Beat Estimates on Margin Gains, Outlook Raised
Kohl's Corporation posted adjusted earnings of $1.28 per share in the second quarter of fiscal 2026, up 128.6% from 56 cents a year ago. The figure beat the Zacks Consensus Estimate of 55 cents per share.
Total revenues fell 0.9% year over year to $3,515 million and narrowly missed the consensus estimate of $3,516 million. The company’s net sales fell 0.9% to $3,318 million, while other revenues fell 1% to $197 million. Comparable sales were down 0.9% year over year. We expected comparable sales to decrease 0.9%.
Kohl’s Quarterly Margin Highlights
The gross margin expanded 305 basis points year over year to 43%. Kohl's received about $150 million of IEEPA tariff refunds during the quarter, with roughly $100 million benefiting cost of merchandise sold. A portion of the refund was also recorded as a reduction of inventory, shared with vendors and invested to deliver greater value to customers.
SG&A expenses declined 0.9% to $1,188 million and remained flat at 33.8% of total revenues. We anticipated SG&A expenses to be 33.7% of total revenues. Operating income decreased to $261 million, down from $279 million in the prior year. Operating margin was 7.4%, reflecting a decrease of 45 bps year over year.
KSS’ Financial Health Snapshot & Other Updates
KSS ended the quarter with $821 million in cash and cash equivalents, up from $174 million a year earlier. Merchandise inventories declined 3% to $2,913 million, while long-term debt fell to $1,325 million from $1,520 million. The company also had no borrowings under its revolving credit facility at quarter-end.
For the first six months, net cash provided by operating activities was $478 million compared with $506 million a year ago. Free cash flow rose to $332 million from $306 million, while adjusted free cash flow increased to $288 million from $270 million.
The company is restarting share repurchases of up to $100 million in 2026 under its existing $3 billion authorization. On Aug. 18, 2026, Kohl’s declared a quarterly cash dividend of 12.50 cents per share, payable on Sept. 23, to its shareholders of record as of Sept. 9.
What to Expect From KSS in FY26?
Kohl's now expects fiscal 2026 net sales and comparable sales to range from flat to down 1.5%, compared with its prior outlook for a decline of up to 2%. Adjusted operating margin is projected at 3.5-4%, up from the earlier forecast of 2.8-3.4%, while adjusted earnings are forecasted at $1.80-$2.40 per share, compared with the previous outlook of a $1.00-$1.60 range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -77.78% due to these changes.
VGM Scores
Currently, Kohl's has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock has a grade of A on the value side, putting it in the top quintile for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Kohl's has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Kohl's belongs to the Zacks Retail - Regional Department Stores industry. Another stock from the same industry, Dillard's (DDS - Free Report) , has gained 3.3% over the past month. More than a month has passed since the company reported results for the quarter ended July 2026.
Dillard's reported revenues of $1.51 billion in the last reported quarter, representing a year-over-year change of -0.4%. EPS of $6.25 for the same period compares with $4.66 a year ago.
Dillard's is expected to post earnings of $7.80 per share for the current quarter, representing a year-over-year change of -6.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.1%.
Dillard's has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.