Q2 2026 Kohls Corp Earnings Call Transcript
Key Points
- Comparable sales improved sequentially, with digital sales up 2.8% and Kohl's Card customer sales up 1%.
- Gross margin expanded 305 basis points in Q2, aided by tariff refunds and disciplined inventory management.
- Strong performance in key categories like Home (up 1%), Juniors (up 10%), and Toys (double-digit growth).
- Proprietary brands grew 3%, with increased inventory depth and successful new launches like FLX and SO.
- Balance sheet strengthened significantly, with cash up over $700 million year-over-year and no ABL borrowings.
- Resumed share repurchase program, planning $100 million in buybacks in 2026, and reduced long-term debt to lowest level since 2007.
- Marketplace business grew 88%, expanding assortment and attracting new customers.
- Raised full-year guidance for comp sales, operating margin, and EPS, reflecting confidence in strategic initiatives.
- Comparable sales declined 0.9% in Q2, with both transactions and average transaction value slightly down.
- Sephora at Kohl's sales fell 4% due to expanded distribution of key brands, with expectations of continued softness.
- Women's business moderated, down 1.5%, partly due to inventory constraints in proprietary brands.
- Macroeconomic pressures persist, with core low-to-middle income customers facing financial strain from inflation.
- Gross margin excluding tariff refunds increased only 5 basis points, indicating underlying margin pressure.
- Credit revenue declined 1% in Q2 and 5% year-to-date, though improving.
- Inventory levels remain down 3%, potentially limiting ability to meet demand in some categories.
- SG&A expenses declined only 0.9%, with planned investments in media and store payroll expected to keep costs flattish.
Hello, everyone. Thank you for joining us, and welcome to Q2 2026 Kohl's Corporation earnings conference call. (Operator Instructions) I will now hand the conference over to Trevor Novotny, Director of Investor Relations. Trevor, please go ahead.
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Thank you. Certain statements made on this call, including those regarding our projected financial results, business outlook and future initiatives are forward-looking statements. These statements are based on current expectations and assumptions and are subject to certain risks and uncertainties that could cause Kohl's actual results to differ materially from those projected.
These risks and uncertainties include, but are not limited to, the factors described in Item 1A of Kohl's most recent annual report on Form 10-K and as may be supplemented from time to time in Kohl's other filings with the SEC. All of which are expressly incorporated turn by reference. Forward-looking statements relate to the date
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