Kohl's Q4 Earnings Beat Estimates, Comparable Sales Dip 2.8% Y/Y

Kohl's Corporation KSS reported fourth-quarter fiscal 2025 results, wherein the bottom line improved year over year and beat the Zacks Consensus Estimate. The top line declined year over year and missed the consensus mark.

Kohl's posted quarterly earnings of $1.07 per share, up from 95 cents in the year-ago quarter. The bottom line also outperformed the Zacks Consensus Estimate of 85 cents.

Kohl's Corporation Price, Consensus and EPS Surprise

Kohl's Corporation price-consensus-eps-surprise-chart | Kohl's Corporation Quote

Total revenues were $5,173 million, down 4.2% from the prior-year quarter’s $5,397 million. The top line also missed the Zacks Consensus Estimate of $5,228 million. The company’s net sales fell 3.9% to $4,972 million, while other revenues fell 9.5% to $201 million. We note that comparable sales dipped 2.8% year over year, primarily due to the decline in store transactions. We expected comparable sales to decrease 2.5%.

Kohl’s Quarterly Margin Highlights

Kohl's gross margin expanded 25 basis points (bps) to 33.1% in the reported quarter. The improvement was primarily driven by strong inventory management, which led to lower clearance markdowns. However, the benefit was partially offset by higher shipping costs, as digital penetration increased 220 bps to 35% of total sales for the quarter. We expected a gross margin increase of 20 bps.

SG&A expenses dropped 4.9% to $1,463 million. As a percentage of total revenues, SG&A expenses decreased 23 bps to 28.3%. We anticipated SG&A expenses, as a percentage of net sales, to be 28.5%.

Operating income increased to $212 million, up from $126 million in the prior year. The prior year’s adjusted operating income was $202 million. Operating margin was 4.1%, reflecting an increase of 176 bps year over year, and a 35-bps improvement compared with the prior year’s adjusted operating margin.

KSS’ Financial Health Snapshot & Other Updates

Kohl's ended the quarter with cash and cash equivalents of $674 million and shareholders’ equity of $4,048 million.

For fiscal 2025, net cash provided by operating activities was $1,380 million. Management expects capital expenditures in the range of $350 million to $400 million for fiscal 2026.

On Feb. 25, 2026, Kohl’s declared a quarterly cash dividend of 12.50 cents per share, payable April 1, to its shareholders of record as of March 18.

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.

This Zacks Rank #4 (Sell) company’s shares have lost 37.3% in the past three months compared with the industry’s decline of 20.5%.

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Stocks to Consider

Five Below, Inc. FIVE operates as a specialty value retailer in the United States and currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Five Below’s current fiscal-year sales and earnings calls for growth of 22.1% and 25%, respectively, from the year-ago reported numbers. FIVE delivered a trailing four-quarter earnings surprise of 62.1%, on average.

Ross Stores, Inc. ROST, 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 (Buy) at present. ROST delivered a trailing four-quarter earnings surprise of 6.1%, on average.

The Zacks Consensus Estimate for Ross Stores’ current fiscal-year sales and earnings implies an increase of 5.6% and 9.4%, respectively, from the prior-year levels.

Williams-Sonoma, Inc. WSM operates as an omni-channel specialty retailer of various products for home. It carries a Zacks Rank #2 at present. WSM delivered a trailing four-quarter average earnings surprise of 8.6%.

The Zacks Consensus Estimate for Williams-Sonoma’s current fiscal-year sales indicates growth of 1.9% from the previous year’s reported figure.

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