Kohl’s (KSS) Q2 2025 earnings summary

Executive summary

• Net sales declined 4.2% in Q2 2024 to $3.5 billion, with comparable sales down 5.1% year-over-year and year-to-date net sales down 4.7%.

• Earnings and diluted EPS rose 13% in Q2, driven by gross margin expansion and disciplined inventory and expense management, despite a challenging consumer environment.

• Strategic growth areas such as Sephora, home decor, gifting, and impulse performed strongly, offsetting softness in core apparel and footwear.

• Inventory was reduced by 9% year-over-year, supporting operational efficiency and improved inventory turn.

• Operating cash flow for the quarter was $254 million, down from $430 million a year ago.

Financial highlights

• Q2 gross margin was 39.6%, up 59 basis points year-over-year, aided by inventory management and lower freight costs.

• SG&A expenses declined 4.2% to $1.2 billion in Q2, representing 33.5% of total revenue.

• Net income for Q2 was $66 million, EPS $0.59, up from $0.52 last year; operating income was $166 million.

• Digital sales declined 4% and represented 25% of net sales; Accessories (including Sephora) grew 16.6% in Q2.

• Cash and cash equivalents at quarter-end were $231 million, up from $204 million a year ago.

Outlook and guidance

• Full-year 2024 net sales expected to decrease 4% to 6%; comparable sales to decrease 3% to 5%.

• Operating margin forecasted at 3.4% to 3.8%; diluted EPS projected in the range of $1.75 to $2.25.

• Capital expenditures planned at approximately $500 million, including Sephora expansion and new store initiatives.

• Quarterly dividend of $0.50 per share declared, payable September 25, 2024.

• Guidance excludes potential impact from credit card late fee regulatory changes due to ongoing litigation.