Kohl’s (KSS) Q3 2025 earnings summary

Executive summary

• Q3 2024 net sales declined 8.8% to $3.5 billion, with comparable sales down 9.3% year-over-year and softness in core apparel and footwear offset by growth in Sephora, home decor, gifting, impulse, and Babies "R" Us shop openings.

• Gross margin improved by 20 basis points to 39.1% due to inventory management and lower freight costs, while SG&A expenses declined 5.1% year-over-year.

• Operating income was $98 million, down from $157 million in Q3 2023; net income was $22 million ($0.20 per diluted share), compared to $59 million ($0.53 per share) last year.

• CEO Tom Kingsbury will step down in January 2025, succeeded by Ashley Buchanan, with Kingsbury remaining as advisor and board member through May 2025.

• Aggressive actions are being taken to reverse sales declines, including rebalancing inventory, targeted marketing, and expanding private brands.

Financial highlights

• Q3 net sales decreased 8.8% year-over-year; year-to-date net sales down 6.1% to $10.2 billion.

• Comparable sales declined 9.3% in Q3 and 6.4% year-to-date.

• Q3 net income was $22 million, EPS $0.20; year-to-date net income $61 million, EPS $0.55.

• Gross margin in Q3 was 39.1%, up 20 bps; year-to-date gross margin 39.4%, up 42 bps.

• SG&A expenses declined 5.1% in Q3 and 3.4% year-to-date; SG&A as % of revenue was 34.8% in Q3.

Outlook and guidance

• FY2024 net sales expected to decrease 7%-8%; comparable sales expected to decrease 6%-7%.

• FY2024 operating margin forecasted at 3.0%-3.2%; diluted EPS guidance of $1.20-$1.50.

• Q4 comparable sales guidance: 5%-8% decrease.

• FY2024 CapEx planned at ~$500M, including Sephora expansion and new store investments.

• Quarterly dividend of $0.50 per share declared, payable December 24, 2024.