KSS · Kohl's Corporation

Kohl's first quarter fiscal 2026 results reflect a modest improvement in top-line trends, with net sales declining 1.7% to $3.0 billion and comparable sales down 1.1% – the best comparable sales performance in over four years according to management. The improvement was driven by key initiatives in merchandise and customer experience, though overall revenue remained pressured by a challenging retail environment. Gross margin expanded 4 basis points to 39.9%, supported by disciplined inventory management and cost controls, while SG&A expenses decreased 1.6% but rose 15 basis points as a percentage of total revenue. Operating income fell to $46 million from $60 million in the prior year, reflecting higher occupancy and depreciation costs. Net loss was essentially flat at ($.13) per diluted share, benefiting from a lower share count and reduced interest expense. Inventory declined 8% year-over-year to $2.9 billion, underscoring tighter working capital management. Cash flow from operations was a use of $74 million during the quarter, partly due to seasonal inventory build, and the company had no borrowings under its revolver, a substantial improvement from $545 million a year ago. The company reaffirmed its full-year 2026 guidance, expecting net sales and comparable sales to range from a decrease of 2% to flat, adjusted operating margin of 2.8% to 3.4%, and adjusted diluted EPS of $1.00 to $1.60. Kohl's also declared a quarterly dividend of $0.125 per share, signaling continued capital return to shareholders. CEO Michael Bender expressed confidence in the ongoing transformation, citing strong expense management and a healthier balance sheet. The outlook implies a gradual recovery trajectory, though the second quarter may show continued volatility before the back-half of the year benefits from easier comparisons and strategic initiatives.